THE   HISTORY  OF  THE   GREAT 
AMERICAN  FORTUNES 


RUSSELL  SAGE. 


HISTORY  OF  THE  GREAT 
AMERICAN  FORTUNES 


BY 


GUSTAVUS    MYERS 

AUTHOR   OK    "THli   HISTORY   OK  TAMMANY   HALL,'1    "  HISTORY  OK 
PUBLIC   FRANCHISES  IN  NEW  YORK  CITY,''   ETC. 


VOL.  III. 

GREAT  FORTUNES  FROM    RAILROADS 

(  CONTINUED) 


CHICAGO 

CHARLES  H.  KKRR  &-  COMPANY 
1911 


Copyright    1909-1910 
BY  GUSTAVUS  MYERS 

Kntrrrd  ;it  Stationers'   Hail.  London,  Eny:.,   1910 
II  v  ( ius-lavus  M  vri's 


JOHN     F.   HIGGINS 

PRINTER    AND    BINDER 


376-382    MONROE    STREET 
CHICAGO,      ILLINOIS 


CONTENTS 

CHAPTER  PAGE 

I.     Ax   INSERT  ON  THE  SAGE  FORTUNE i  i 

II.     MOKE  DETAILS  OF  THE  SAGE  FORTUNE 44 

III.     THE  GOULD  FORTUXE  RESUMED (13 

IVr.  THE  PRESENT  STATUS  OF  THE  GOULD   FORTUNE     .      .     80 

V.  THE  BLAIR  AND  THE  GARRETT  FORTUNES     ....    ioj 

\"I.     THE    PACIFIC    QUARTET i_'4 

\'\l.     ].    PIERPOXT    MORGAN'S   GENESIS 146 

\'I1I.  THE   FLO\VERING  OF  THE   MORCAX    FORTUXE      .      .      .177 

IX.  MORGAX  AS  A  BANKING  AND  RAILROAD  GRANDEE  .      .   J<M 

X.  MORGAN  THE  "PEERLESS  CAPTAIN*  OF  INDUSTRY"   .      .   227 

XI.     MORGAN   AT   II  is  ZENITH _<44 

XII.  MORGAN    AS  "Tin-:  SAVIOR  OF  THE   NATION"      .      .      .   287 

XI  f  I.     THE    Hi. KINS    FORTUNE 311 

XIV.  THE  HILL  FORTUNE                                                          .    ??8 


PART  III 

THE    GREAT    FORTUNES    FROM    RAILROADS 
(Continued) 


HISTORY   OF   THE   GREAT 
AMERICAN    FORTUNES 

CHAPTER  1 
AN  INSERT  ON  THE  SAGE  FORTUNE 

Russell  Sage  was  mellow  with  experience  when  Gould 
was  still  in  Ins  verdant  youth  ;  years  before  Gould  began 
his  predacious  career,  Sage  had  the  reputation  among  the 
knowing  of  being  an  old  hand  at  political  and  financial 
corruption.  Was  this  reputation  justified?  And  did 
Sage  garner  his  first  millions  by  illicit  methods?  Cer- 
tain of  his  biographers  glide  nimbly  over  these  ques- 
tions, while  others  tell  their  ready-made  advocates'  tale  ; 
how  by  his  thrift  and  enterprise,  his  marvelous  business 
astuteness,  and  his  imposing  array  of  other  mercantile 
virtues  and  faculties  he  made  his  great  fortune.1  It 
would  denote  a  lack  of  fidelity  to  these  accounts  were 
the  word  "sterling"  omitted  in  connection  with  virtues; 
in  the  case  of  our  multimillionaires  virtues  must  neces- 
sarily be  "  sterling  virtues.''  Were  it  not  that  the  same 
stock  phrases  abound  in  all  of  these  eulogies,  they  might 
provoke  a  gush  of  emotion,  so  touching  are  they,  and 
often  pathetic.  Hut  the  moment  the  test  of  examina- 
tion is  applied  they  turn  out  to  be  sheer  inventions. 


12        HISTORY    OF    TllK    GREAT    AMERICAN    FORTUNES 

In  fact,  all  such  works  betray  their  o\vn  obvious  worth- 
lessness. 


SAGE  S    GREAT    DEFECT. 

One  of  the  expected  virtue.-,  however,  Sage  griev- 
ously lacked,  and  it  was  by  reason  of  this  omission  that 
he  was  the  subject  of  gibes  ar.d  harsh  criticism  through- 
out his  life.  So  far  as  the  methods  that  he  used  in  get- 
ting together  his  millions  went,  he  was  not  attacked; 
on  the  contrary,  in  his  later  years  at  any  rate,  he  was 
represented  as  a  very  shrewd  man  who  made  his  money 
by  legitimate  means.  It  was  his  niggardliness  which 
proved  the  ground  for  his  unpopularity.  The  severe 
economy  preached  as  one  of  the  great  stepping  stones 
to  fortune,  was  condemned  alter  the  fortune  had  been 
acquired.  A  certain  state  of  public  mind  or  standard 
had  been  built  up  almost  requiring  that  the  millionaire 
should  be  a  "  good  spender  "  ;  he  should  live  sumptu- 
ously, blaze  forth  in  glitter,  and  have  some  pet  philan- 
thropy. 

Sage's  recusant  quality  classified  him  as  quite  distinc- 
tive among  the  verv  rich  men  of  his  time.  Xo  self- 
indulgence  for  him,  no  extravagance,  no  expensive  hob- 
bies or  splurges.  He  was  a  man  who  displeased  his  class 
and  violated  its  canons;  to  such  it  seemed  that  he  made 
wealth  odious  to  the  masses  bv  declining  to  invest  it 
with  that  generosity  which,  it  was  supposed,  softened  the 
popular  hostility  to  the  system  allowing  its  accumula- 
tion. 

Hence  arn-e  an  undue  rasping  criticism  of  his  per- 
-onalitv.  Xearlv  all  of  the  millionaire-  of  his  dav. 
after  piling  up  their  heaps,  gloried  in  some  costly  con- 
reil  or  re-plendent  -how.  Xone  of  thi-  fmerv  •  r  foolery 


TIIK  S.U;K   Foim.'Nii  13 

for  the  crustaceous  Sage.  J  le  >pent  just  enough  to  al- 
low himself  a  comfortable  domicile  on  Fifth  avenue,  one 
of  the  thoroughfares  of  the  rich  in  Xe\v  York  city; 
aside  from  this  moderate  expenditure,  he  was  notoriously 
parsimonious;  his  very  clothes  were  the  jest  of  the  coun- 
try. 

Had  he  yielded  to  the  prevalent  custom  of  buying  the 
reputation  of  philanthropist  and  "  benefactor  of  man- 
kind "  by  impressive  donations  or  endowments  (to  be 
recouped  by  further  pillage)  he  would  infallibly  have 
been  otherwise  judged.  Fie  made  no  attempt,  however, 
to  propitiate  harsh  public  opinion;  be  it  said  to  his  credit 
that  he  was  unshakenly  faithful  to  his  sordid  ideals ; 
at  no  time  did  he  curry  praise  or  essay  to  conciliate  by 
rlinging  out  as  a  social  bribe  morsels  to  charity  or  phi- 
lanthropy. \Yhere  his  compeers  (whatever  their  mo- 
tives) confused  or  deceived  the  public  estimate  of  them 
and  their  ways  by  distributing  largess  every  now  and 
then,  he  made  no  advances  or  pretensions  ;  in  the  respect 
that  he  candidly  idolized  money,  moralizing  and  -ham 
almsgiving,  cant  and  humbuggery  were  absent  in  his 
composition. 


IIIS    CARF.F.K    AT    T1IF.    START. 

Sage  was  born  of  farmer  folk  in  1816  in  Oneida 
Count}-,  Xew  York,  in  an  environment  of  poverty  and 
cramping  horizon.  There  is  a  paucity  of  information 
about  his  youthful  days.  \Ye  learn  that  as  a  boy  his 
dominant  yearning  was  for  money,  and  that  he  devel- 
oped a  remarkable  capacity  for  sharp  trading.  He 
clerked  in  his  brother's  grocerv  store  at  Troy,  doubtless, 
we  may  reasonably  surmise,  learning  all  of  the  profita- 
ble little  trick<  of  dealing  with  customers  which  an  ef- 


14      HISTORY  OF  TIII-:  GRKAT  AMKRICAN   FOKTCNKS 

licient  clerk  \vas  taught,  expected  and  paid  to  do;  de- 
ceit \vas  then,  as  it  is  now,  the  lever  of  all  successful 
business.  Xo  doubt  he  carefullv.  ever  so  carefully, 
saved  money,  and  so  likewise  did  tens  of  thousands  of 
other  clerks  —  thrift}-,  ambitious  striplings  \vho  put  it 
away  as  they  were  beneficently  advised.  But  the  rule  of 
thrift  worked  wrong-side  in  irost  of  their  cases;  very 
few  of  them  became  rich,  despite  their  sticking  punc- 
tiliously to  all  of  the  regularly  prescribed  axioms.  Plain 
it  ever  has  been  that  thrift,  temperance  and  hard  work 
are  not  the  recipe  for  getting  rich,  else  many  millions 
of  people  who  have  to  work  hard,  and  who  are  thrifty 
and  temperate,  would  forthwith  become  so.  The  ortho- 
dox formulas  did  not  produce  riches,  as  Sage's  fellow 
clerks  found  out.  What,  then,  brought  wealth  to  him  ? 

"  Long  before  down  appeared  on  his  chin  he  had 
gained  a  local  reputation  of  being  unu.-ually  keen  at 
'swapping.5'  So  wrote  a  eulogist  whose  description, 
slight  though  it  be,  gives  a  clue  to  Sage's  methods  in 
boyhood  days.  We  are  told  that  he  amassed  enough 
money  to  open  a  grocer}-  .-tore  of  his  own,  and  that  in 
1830,  he  became  a  partner  in  a  wholesale  grocery  estab- 
Hshment. 


SWINDLE. 

On  September  12.  iS;i.  Sage  and  two  other  Troy 
men  formed  a  copartnership,  under  the  name  of  Wheeler, 
Sage  and  Slocum.  to  carry  on  a  general  produce  busi- 
ness at  Troy,  with  a  Western  headquarters  at  Mil- 
waukee, under  the  name  of  Wheeler  and  Company. 
This  copartnership  was  signalized  by  a  memorable  Dwin- 
dle, which  called  forth  one  of  the  severest  decisions  and 


TTIK    SACK    niKTrXK  15 

denunciations  ever  handed  down  by  the  Supreme  Court 
of  the  United  States.'"'  The  firm  deliberated  concocted 
a  plan  to  cheat  the  creditors  of  one  of  its  bankrupt 
creditors  in  Milwaukee,  and  while  it  was  engaged  in 
this  operation.  Sage  hoodwinked  and  cheated  his  own 
partners  out  of  the  proceeds  of  the  swindle. 

The  facts  as  given  in  the  statement  of  the  case  and 
the  decision  of  the  Supreme  Court  of  the  United  States 
were  as  follows : 

The  firm  became  the  owner  of  a  large  debt  against 
one  Alanson  Sweet  of  Milwaukee,  a  debt  secured  by  a 
mortgage  on  valuable  real  estate.  This  real  estate  in- 
cluded a  large  warehouse,  which  Wheeler  and  Com- 
pany had  rented.  Proceedings  to  foreclose  the  mort- 
gage against  the  bankrupt  Sweet  were  begun  in  Octo- 
ber, 1854,  and  a  decree  was  passed  by  the  Wisconsin 
courts  in  November,  1855.  The  Supreme  Court's  state- 
ment of  the  case  went  on  to  say  that  Wheeler,  Sage 
and  Slocum  were  desirous  of  getting  a  perfect  title  to 
the  mortgaged  premises,  the  value  of  which  was 
$50,000  when  the  mortgage  was  given.  But  other 
creditors  had  judgments  against  Sweet,  and  Sweet 
claimed  the  sum  of  $12,000  due  him  from  \Yheeler  and 
Company  for  three  years'  rent  of  the  warehouse. 

If  Sweet  put  in  this  defence  successfully,  a  perfect 
title  could  not  be  secured.  Tt  was  necessary,  also,  to  de- 
ceive and  bluff  the  other  creditors.  In  order  to  grasp 
the  whole  of  the  real  estate,  the  court  said.  Wheeler. 
Sage  and  Slocum  thought  it  necessary  to  purchase  cer- 
tain judgments,  and  make  other  arrangements  by  col- 
lusion. Sage  informed  Wheeler  and  Slocum  that  this 

-  See  Wheeler  v.  S;i«e.  \Vall.uv'-  Report*.  Supreme  C':':rt  of 
the  Tnited  State*,  1:518  r(:ll. 


[Q         HISTORY    OF    Till-.    iIREAT    AMERICAN    1-ORTt'NES 

could  be  done  1>v  buving  off  Alexander  Mitchell,  who 
controlled  Sweet's  defence,  for  $10.000.  The  court's 
-latement  continues  : 

Sage  was  authorized  to  perfect  the  agreement,  and  to  charge 
Wheeler  and  Slocuin  their  proportionate  amount  on  the  books 
of  the  firm.  This  agreement  or  a  similar  one,  was  made  by 
Sage  with  Mitchell,  and  judgments  purchased  under  it.  ll'ith- 
i"i:t  tiie  knoii'ledge  of  Wheeler,  Sage,  hoii'crer,  abandoned  this 
agreement,  and  made  one  li'ith  Mitchell  for  his  oicvz  benefit. 
The  mortgaged  property  was  sold,  and  Mitchell  became  the  pur- 
chaser, letting  Sage  have  one-third  interest  on  certain  condi- 
tions; this  being  done,  as  alleged,  in  violation  of  the  rights, 
and  without  the  knowledge  of  Wheeler  and  Slocum.  The  mort- 
gaged debt  \vas  fixed  at  $24.000,  two-thirds  of  which  amount 
was  paid  over  by  Sage  to  Wheeler  a/id  Slocum,  being,  as  he 
[Sage]  said,  the  best  that  could  be  done,  and  which  was  ac- 
cepted by  Wheeler  and  Slocum  on  that  hypothesis.3 

SAGE    SWIXDLES    HIS    PARTNERS. 

Yet,  the  court  went  on  to  relate,  enough  of  the  mort- 
gaged property,  as  Wheeler  found  out  and  charged,  had 
been  sold  to  produce  $105.000,  in  addition  to  unsold  prop- 
erty, valued  at  $27,000,  still  in  Mitchell's  hands.4 

On  the  usual  legal  ground  that  when  a  party  obtains 
an  advantage  by  fraud,  he  is  to  be  regarded  as  trustee 
of  the  party  defrauded  and  compelled  to  account, 
Wheeler  brought  suit  against  Sage.  He  sued  to  have 
Sage  declared  trustee  for  himself  (Wheeler)  for  one- 
third  of  the  mortgaged  property  still  held  and  unsold  by 
Mitchell,  and  for  one-third  of  the  proceeds  of  the  prop- 
erty that  had  been  sold. 

The  Supreme  Court  of  the  United  States  declared  the 
whole  Iran-action  fraudulent;  that  while  Wheeler,  Sage 

-Wallace's  Reports,  Supreme  Court  of  the  United  States, 
i  :  519. 

4  Ibid. 


THE    SACK    FORTUNE  17 

and  Slocum  had  successfully  conspired  to  cheat  Sweet's 
numerous  other  creditors.  Sage  had  tricked  and  cheated 
his  own  partners.  They  had  set  out  to  get  by  fraud 
real  estate  worth  $50,000  for  $30,000,  and  had  authorized 
Sage  to  arrange  the  collusion.  Sage  had  afterward  re- 
linquished the  agreement  with  Mitchell,  and  had  secured 
clandestinely  an  advantage  to  himself,  "to  the  injury  of 
the  other  parties." 

In  further  stating  the  court's  decision.  Justice  Davis 
continued  : 

The  evidence  in  this  case.  consisting  mainly  of  letters  inter- 
changed between  Wheeler  and  Sage,  shows  clearly  enough  that 
a  scheme  was  initiated  to  get  title  to  the  property,  and  that 
Sage  was  the  active  agent  to  perfect  it,  but  for  some  unex- 
plained reason  it  failed.  .  .  .  All  parties  rested  in  the  belief 
that  negotiations  with  Mitchell  would  be  successful  ;  but  .  .  . 
Sage  abandoned  the  idea  of  buying  the  property  on  joint  ac- 
count, and  bargained  with  Mitchell  in  his  own  behalf.  .  .  . 
The  "  Warehouse  Case,"  as  it  is  somewhere  called  in  the  record, 
is  anything  but  creditable  to  the  parlies  concerned,  and  it  is 
surprising  that  they  should  have  been  willing  to  give  it  pub- 
licity through  a  legal  proceeding.  .  .  .  The  scheme  was  to 
get  the  real  estate  by  depreciating  its  value  through  a  process 
of  entering  judgment  for  a  large  nominal  amount,  and  by  de- 
ceiving and  "  bluffing  off  "  other  creditors.  The  court  fin  Wis- 
consin  which  passed  the  foreclosure  decree]  was  imposed  upon, 
and  a  combination  formed,  the  object  and  direct  tendency  of 
which  was  to  secure  title  to  the  valuable  real  estate  of  an 
insolvent  debtor  at  the  expense  and  sacrifice  of  his  other  cred- 
itors. 

The  court  declined  to  pass  judgment,  one  way  or  the 
other,  on  the  ground  that  a  party  who  had  been  engaged 
in  an  illegal  transaction,  could  not  expect  redress,  after 
being  cheated,  in  any  court  of  equity.  "  A  proceed- 
ing like  this  is  against  good  conscience  and  good  morals, 
and  cannot  receive  the  sanction  of  a  court  of  equity. 


1 8          HISTORY    01-     Till 

It  is  again>t  the  jxilicy  of  the-  law  to  help  either 
party  in  such  controversies."'5  The  effect  of  this  de- 
cision \vas  to  leave  Sage  in  possession  of  the  proceeds 
of  his  swindling  operation. 

For  seven  years  Sage  held  the  offices  of  Alderman  of 
Troy  and  of  Treasurer  of  Rensselaer  County.  Xow  it 
is  that  we  get  the  first  clea"  penetration  into  the  methods 
by  which  he  gathered  in  his  first  notable  amount  of 
money.  Xot  by  trafficking  in  weights  and  measures 
was  it,  nor  by  petty  swindling,  but  by  a  transaction  in 
which  as  a  public  official  he  betrayed  the  city  of  Troy 
into  selling  to  himself  for  a  small  sum  a  railroad  line, 
which  railroad  he  later,  according  to  a  prearranged  plan. 
sold  to  the  Xew  York  Central  consolidation  at  a  very 
large  profit. 


HOW    SAGE    OBTAINED    HIS    EIRST    SWEEP    OF    WEALTH. 

There  is  nothing  vague  or  conjectural  regarding  this 
illuminating  transaction:  the  facts  are  inscribed  authen- 
tically in  the  public  records. 

In  the  years  1840-43.  the  city  of  Troy,  at  public  ex- 
pense, began  to  build  a  railroad  running  twenty-one  miles 
from  that  city  to  Schenectady.  The  city  of  Troy,  in 
1837  an(^  1$47-  borrowed  a  total  of  $650.000,  and  in  1840 
the  State  of  Xew  York  loaned  Troy  Sioo.ooo,  making 
8750.000  in  all  for  the  construction  and  equipment  of 
the  Trov  and  Schenectady  Railroad.  It  was  a  time  when 
capitalists  passively  looked  on,  allowing  many  munic- 
ipalities and  some  of  the  States  to  build  publicly-owned 
railroads  and  operate  them  for  a  time,  and  then,  after 
many  millions  of  public  money  had  been  expended,  capi- 

Unitcil    Stales, 


TIFI-:  SACK   roRTrxi:  19 

talists  would  contrive  to  take  over  the  ownership  unto 
themselves.  This  they  did  by  depreciating  and  crip- 
pling railroads  owned  by  the  community,  and  bv  cor- 

I  O  -  tf     '  ml 

rupting  public  officials  to  sell  or  lease  them  for  compara- 
tively insignificant  sums.  It  was  a  favorite  practice  of 
the  period,  and  was  worked  with  great  success. 

The  task  of  providing  themselves  with  modern  means 
of  transportation  frequently  devolved  upon  communities, 
since  no  capitalist  would  take  the  initiative  in  any  un- 
dertaking in  which  he  did  not  see  considerable  immedi- 
ate profits.  The  aim  of  the  community  was  service  ;  that 
of  the  capitalist,  profit.  Communities  would  never  stop 
to  consider  whether  a  railroad  would  yield  profit ;  the 
sole  question  guiding  them  was  that  of  public  need. 
The  principle  which  made  the  people  acquiescent  in  the 
loaning  or  donating  of  large  sums  of  money  to  private 
railroad  corporations  was  that  railroads  were  a  public 
necessity,  whether  publicly  or  privately  built.  In  New 
York  State  alone,  not  to  mention  other  States,  the  rail- 
roads originally  received  from  cities,  towns,  villages  and 
from  the  State,  the  sum  of  $40,039,496.82  by  donation  or 
investment ;  e  a  very  considerable  amount  it  made  at  a 
time  when  a  dollar  had  a  much  greater  purchasing 
power  than  now.  Of  this  sum,  only  about  one-fourth 
part  was  paitl  back ;  at  various  times  laws  were  cor- 
ruptly passed  releasing  the  railroad  companies  from  lia- 
bility for  these  debts.  Every  mile  of  those  railroads  is 
to-day  absolutely  owned,  or  practically  so,  by  private  in- 
terests. 

As  the  greater  number  of  railroads  were  owned  by  pri- 
vate corporations,  it  was  not  difficult  for  them  to  bank- 
rupt publicly-owned  railroads  when  they  set  out  to  do 


2O         III. 


in:;'  freight  rind  passenger  traffic  or  l>y  corrupting  public 
officials  to  mismanage  llicin.  This  conflict  ol  public  and 
private  intere.--t  ab.vavs  resulted  in  the  triumph  of  private 
interest ;  necessarily  so  because  public  welfare  and  pri- 
vate profits  were  an  incongruous  mixture,  the  one  the 
antithesis  of  the  other,  and  also  because  the  governing 
officials  were  either  of  the  propertied  classes  or  respon- 
sive or  subservient  to  them. 

By  these  methods  the  campaign  against  the  public 
ownership  of  the  Troy  and  Schenectady  Railroad  was 
begun.  Small  detached  railroads  were  anomalies  at  best ; 
economic  development  demanded  one  of  two  solutions; 
either  that  they  became  merged  in  a  great  public,  or  in  a 
great  private,  system.  Disconnected,  they  were  waste- 
ful, inconvenient  and  unsystematic.  This  essential  fact 
is  fully  borne  in  mind  in  stating  the  facts. 

Among  the  railroad  capitalists  the  movement  for  com- 
bination and  cohesion  commenced  at  about  1850.  In 
Xew  York  State  a  combination  of  various  bankers,  land- 
owners and  politicians  concluded  along  in  1851  that  it 
would  be  an  excellent  scheme  to  unite  many  of  Xew 
York's  separate  little  railroads  into  one  centralized  sys- 
tem. They  were  not  prompted,  it  is  true,  by  solicitude 
for  the  community;  very  far  from  it;  the  community  to 
them  signified  a  domain  for  spoils.  Xor  did  they  have 
any  appreciation  of  the  economic  forces  behind  their 
project.  Their  one  propelling  idea  was  to  buy  up  the 
small  railroads  for  trifling  sums  and  then  organize  a 
corporation  and  sell  those  railroads  to  the  corporation  at 
a  tremendous  profit.  Xevertheless,  in  carrying  forward 
the  centralizing  movement  they  did  a  necessary  service 
to  the  community,  however  heavilv  the  people  have  ha  i 
to  pav  for  it.  The  Troy  and  Schenectady  Railroad  was 


21 


agreed  u])on  as  one  of  the  roads  to  be  included  in 
o  imbination. 


A    CITY    r.KTKAYKI)    AND    I'LL'NDKRKD. 

llo\v  was  the  city  of  Troy  to  be  induced  to  sell  its 
railroad  to  the  clique  of  projectors?  This  was  the 
problem.  It  did  not  perturb  them  long.  Russell  Sage 
undertook  to  carry  through  this  portion  of  the  bargain. 
1  ie  was  at  this  time  a  leading  member  of  the  Troy  Com- 
mon Council,  and  was  serving  as  one  of  Troy's  directors 
in  the  managing  of  the  Troy  and  Schenectady  Railroad. 
His  first  move,  it  would  appear,  was  to  cause  a  steady 
mismanagement  of  the  railroad's  affairs  so  as  to  create 
dissatisfaction,  if  not  disgust,  with  the  continuance  of 
public  ownership  and  operation.  Very  deftly  \vas  his 
undermining  and  sapping  work  done  —  so  deftly  and  by 
such  surreptitious  methods  that  no  suspicion  of  his  com- 
plicity was  aroused.  A  public  sentiment  unfavorable  to 
Troy's  retention  of  the  railroad  was  *hen  adroitly  worked 
up;  public  petitions  praying  for  the  sale  of  the  unprofita- 
ble and  unsatisfactory  road  began  to  flow  in  to  the  Com- 
mon Council. 

What  did  the  Common  Council  now  do?  It  appointed 
a  committee  to  consider  the  question  of  selling;  of  this 
committee  Sage  was  the  most  active  member.  So  very 
active  was  he  that  the  committee  reported  favoring  the 
selling  of  the  railroad.  The  proposition  was,  in  fad. 
carried  by  one  vote:  it  was  Sage's  vote  which  decided. 
Then,  on  January  24.  1853,  another  committee  of  the 
Common  Council  was  appointed;  its  assigned  function 
was  to  sell  the  stock,  franchise  and  propertv  of  the  rail- 
road for  not  less  than  £200.000.  Who  was  it  thai  al.-o 
singularly  happened  to  be  the  foremost  member  of  thi- 


22         HISTORY    OE    THE    GREAT    AMERICAN    FORTUNES 

second  committee?  The  phenomenally  industrious  Al- 
derman Sage.  And  when  the  railroad  was  finally  sold, 
who  was  it  that  bought  it?  A  company  headed  by  Sage, 
and  Sage  it  was  who  became  its  president.7  Extra* n-- 
dinarily  considerate  were  the  terms  of  sale;  $50,000  \va- 
to  be  paid  down,  the  remainder  in  fourteen  years. 

A    LITTLE    DISTRIBUTION    OF    S8.OOO.OOO. 

Quite  a  legitimate  transaction,  the  apologist  might  say  ; 
according  to  the  law,  however,  it  constituted  malfeasance 
in  office  :  many  an  officeholder  in  various  cities  had  been 
removed  for  less  flagrant  acts.  It  was  recognized  gen- 
erally as  a  gross  piece  of  corruption,  but  nothing  was 
done  to  interfere  with  its  success  nor  with  the  greater 
corruption  that  followed.  Having,  under  form  of  law, 
grabbed  the  Troy  and  Schenectady  Railroad,  Sage  sold 
it  for  $900,000  or  so  to  the  group  of  capitalists  forming 
the  Xew  York  Central  Railroad  combination.  Although 
but  $50,000  had  been  paid  for  it  in  cash.  Sage  and  his 
associates  disposed  of  it  not  only  for  the  full  value  of  its 
$650,000  capital  stock,  but  they  also  received  in  exchange 
a  premium  of  twenty-five  per  cent,  on  that  amount  in 
Xew  York  Central  bonds.  In  this  formation  of  the  Xew 
York  Central.  S8.ooo.ooo  in  bonds  —  all  watered  —  were 
distributed  a^  a  bonus  among  the  owners  of  the  various 
railroads  embraced  in  the  consolidation  :  s  no  insignificant 
portion  of  the  eight  millions  was  Sage's  share  of  the 
s]  (oils. 

7  See    Investigation    of    the    Railroads    of    the    State    of    Xew 

'••"}    Committee"   K-ei-iative   invc-tisation   of    1,^70 
it!       i  '   tor}    of  tlii>    Muck  watering  operation.     An   ar 
i, it  "i    the    I'ruy  transacti-m  liy   F.   \Y.    Pn\vdl.  cnti;led   ''Two 
;       ;••-    i;i     PuMir     Uwnership    of    Strain     Railr<->a<l~,"    :.p 
:      tin     '  (JuancH.v  Journal   of    F.coii"inic-,"   i>-u.e   nf   Xo 


mi-;  S.U;K  I-'OKTL'NI;  23 

\\'hatcver  might  be  the  later  outcries  of  Troy's  popu- 
lation over  the  merciless  extortions  of  the  Xe\v  York 
Central  Railroad,  Sage  was  now  heralded  more  of  a 
"prominent  citizen"  than  ever  beiore,  a  citizen  oi  ex- 
ceeding worth,  stability  and  standing.  The  glorious  and 
patriotic  occupation  of  politico-business  man.  with  its 
radius  of  opportunities,  had  proved  very  lucrative.  \et 
the  national  capital.  Sage  concluded,  held  out  much 
greater  inducements.  Accordingly,  the  corrupt  Troy  po- 
litical ring,  of  which  he  was  a  leader,  caused  him  to  be 
elected  to  Congress  ;  there  he  took  his  seat  in  December, 
1853,  and  in  1854  was  reflected. 

That  was  the  era  when  act  after  act  was  passed 
granting  money  and  land,  either  openly  or  by  indirection, 
to  railroad  companies,  and  giving  corrupt  powers  and 
privileges  of  all  miscellaneous  kinds  to  other  corporations 
and  to  individual  capitalists.  In  the  one  year  of  1850, 
exclusive  of  other  years.  Congress  passed  at  least  thirty 
railroad  land-grant  acts  for  the  benefit  of  as  many  sep- 
arate railroad  corporations  —  acts  under  which  these 
railroad  companies  obtained  the  ownership  of  tens  of 
millions  of  acres  of  public  land.  The  corrupt  means 
used  to  get  these  acts  through  proved  one  of  the  great 
scandals  of  the  times,  and  led  to  the  appointment  of 
numerous  Congressional  and  State  legislative  investigat- 
ing committees.  Few  members  of  Congress  and  legisla- 
tures there  were,  as  was  abundantly  shown,  who  did  not 
take  bribes  either  in  money  or  in  stocks  and  bonds. 

!  f  Sage  was  barely  noticeable  in  Congress,  and  a  tol- 
erably complete  blank  in  public  life,  he  nevertheless  all 
the  more  effectively  and  intimately  cohered  himself  with 
many  ol  these  <ame  rich  railroad  project-;.  The  particu- 
lar means  whereby  he  did  so  are  not  ascertainable.  but 
'ertain  it  is  that  when  he  left  Congress  he  was  found  to 


be   a    conspicuous    "insider"    of    various   of    these    land 
grant  railroad  corporations. 

fXRKSTK. \IXKI)    FRAUD    AXt)    I-JRIBIiRV. 

lie  was  called  the  father  of  railroad  construction 
companies  in  Wisconsin  and  Minnesota."  warbles  a  rhap- 
sodizing writer,"  apparently  confident  that  the  reference 
will  redound  to  Sage's  undying  credit.  What  this  eulo- 
gist prudently  omits  is  an  account  of  how  these  com- 
panies secured  their  charter-  and  land  grants. 

The  Minnesota  and  Northwestern  Railroad  Company 
was  one  of  the  railroad  companies  which  obtained  its 
charter  and  land  during  the  very  time  Sage  was  in 
Congress ;  the  act  was  passed  to  the  accompaniment  of 
charges  of  fraud  and  bribery.  As  regards  this  corpora- 
tion, however,  there  is  no  documentary  evidence  connect- 
ing Sage  with  it.  Hut  it  is  worth  while  referring  to  it. 

A  -elect  committee  of  the  House  was  appointed  on 
July  24.  1854.  to  investigate:  and  although  the  commit- 
tee handed  in  an  evasive,  whitewashing  report,  the  testi- 
mony given  before  it  undoubtedly  proved  that  somehow 
the  wording  of  the  act  had  been  fraudulently  changed 
in  the  House  in  the  process  of  engrossing.  These 
changes,  according  to  J.  Travis  Rosser.  secretary  of  the 
Territory  of  Minnesota,  "gave  million-  of  dollars"  to 
the  railroad  company  in  f|uestion.  As  originally  passed 
>enate.  the  bill  had  given  the  donation  of  land 
to  the  I  erritory  of  Minnesota,  not  to  the  company;  a-  it 
hnalh  •••  becoming  a  law.  the  bill  contained  the 


ifu 


TIIF.    SACK     roKTrXK  2  5 

been  made  in  the  debate  over  the  bill  whereby  the  op-- 
position of  certain  of  its  opponents  was  bought  off,  a 
statement  which  the  incriminated  denied."  The  ma- 
jority of  another  committee,  appointed  on  July  10,  1X54. 
to  investigate  charges  of  bribery  reported:  '  The  under- 
signed believe  that  it  is  clearly  established  by  the  testi- 
mony that  money  has  been  liberally  used  to  secure  the 
passage  of  bills,  and  they  verily  believe  that  much  more 
evidence  could  be  procured  if  time  had  been  allowed  the 
committee  to  make  a  more  thorough  investigation  of  the 
facts."  1L' 

Till-;    ENTERPRISING    FACTORY    OWNERS. 

This  committee  found  that  Samuel  Colt,  the  founder 
of  a  fortune  based  upon  the  manufacture  of  firearms, 
paid  out  at  least  $15,000  to  Dickerson.  his  attorney  and 
one  of  his  lobbyists,  to  buy  oft  the  opposition  in  Con- 
gress to  a  bill  extending  Colt's  patent  rights,  the  time 
limit  of  which  had  expired.  The  testimony  indicated 

11  Rep.  Xo.  352.  (854:^5.  This  act  was  later  repealed.  See 
Chapter  ii.  Lowlier  was,  for  a  time,  acting-president  of  this  com- 
pany. He  was  a  notoriously  corrupt  New  York  city  politician, 
and  at  that  very  time,  wa^  making  considerable  sums  of  money, 
liy  fraudulently  Celling  land  at  exorbitant  prices,  to  New  York- 
city.  (See  "The  History  of  Tammany  Hall."  p.  216.)  Lowlier, 
or,  one  of  these  occasions,  corruptly  sold  land  to  the  city  of 
New  York  for  $106,000,  \vhich  the  Controller  refused  to  pay  on 
the  ground  that  this  sum  was  live  or  six  times  more  than  the 
lard  wa->  worth.  Lowlier  recovered  judgment  in  the  couns 
against  the  city,  and  when  the  Controller  declined  to  satisfy  i 
was  on  the  point  of  causing  Xew  York's  City  Hall.  ir.  iS'-.S.  • 
lie  sold  at  auction,  when  Mayor  Tieinann  halted  the  proceed- 
ings, and  raided  the  necessary  -ami.  As  it  was,  the  paintings  and 
statuary  in  the  City  Hall  were  sold,  and  were  hid  in  by  Mayor 
'I  ieinann's  secretary. 

(  Mher  officers  of  the  Minnesota  and  Northwestern  Railroad 
Company  were  equally  notorious  Xfu  Yo'-k  lobbyists  and  cor- 
rtiptionislij. 

:-  Reports  of  Committees,  T'nim  third  Congress,  l-'ir>i  Se> 
-ioi..  Vol.  lii,  Report  Xo.  352:35. 


26 

that  about  $00,000  in  all  was  spent  in  getting  the  bill 
pa>sed.  Another  lobbyist.  Jere  Clemens,  who  also  did 
the  disbursing  of  Colt's  bribe  money,  was,  at  the  same 
time,  as  he  admitted  under  oath,  lobbying  for  various 
railroad  corporations  seeking  land  grants,  and  for  a  bill 
similar  to  Colt's  which  extended  the  patent  rights  of 
Cyrus  H.  McCormick,1"  a  manufacturer  of  reaping  ma- 
chines, and  the  founder  of  a  multimillionaire  fortune. 

And  how  other  factory  owners  were  bribing  Congress 
to  pass  tariff  acts  was  disclosed  bv  the  investigation  of  a 
select  committee  of  the  House,  the  majority  of  which 
committee  reported  that  one  firm  in  particular.  Laurence. 
Stone  and  Company,  of  Boston  and  Xew  York,  owners 
of  the  large  Middlesex  Mills,  and  the  equally  large  Bay 
State  Mills,  in  Massachusetts,  had  expended  887.000  in 
bribes  to  have  the  duties  on  raw  woolen  materials  and 
dye  stuffs  reduced.14  Failing  to  get  from  Congress, 
politically  pledged  to  a  low  tariff,  a  high  protective  tariff 
on  woolen  goods,  they  set  out  to  accomplish  the  same 
result  bv  securing  a  reduction  of  customs  duties  on  raw 
material.  One  of  the  lobbyists  for  this  firm  was  A.  R. 
Corbin.  brother-in-law  of  Clysses  S.  Grant,  the  same 
Corbin  whom  Gould  later  bought  up  in  his  gold  manip- 
ulation.  Corbin  received  ST.OOO  in  bribes  from  Laurence. 
Stone  and  Company,  and  he  made  no  concealment  of  the 
fact  that  he  had  been  regularly  acting  for  the  Tllinoi-. 
(  'entral  Railroad  and  other  railroad  corporations. 

(his  was  the  time,  it   will  br  recalled,  when   Commn 
rlore    Corneliu-    Yanderbilt.    K.    K.    Collins,    and    other 
steamship   capitalist-    were   debauching   Congress   to   get 


Till-:    SACK     FORT  (.'NIC  2"J 

mail  subsidies,  and  when  \  underbill  was  blackmailing 
two  Pacific  steamship  lines  out  of  $612,000  a  year  of  the 
(Government  subsidy  funds.  It  was  also  during  the>e 
years  that  a  House  committee,  after  investigation,  found 
that  the  enacting  charter  and  the  land  grant  of  the  DCS 
.Moines  Navigation  and  Railroad  Company  were  passed 
by  bribery.1-"'  Obviously,  judging  from  the  reports  of 
these  various  investigating  committees,  and  from  the 
much  more  significant  circumstances  calling  for  the  ap- 
pointment of  those  committees,  Congress  reeked  with 
fraud  and  bribery,  of  which  only  slight  oozings  came  to 
the  surface;  and  we  incidentally  get,  in  passing  along, 
a  lucid  insight  into  some  of  the  methods  of  the  founders 
of  great  fortunes  based  upon  manufacturing  industries. 

Bribery,  indeed,  was  so  undeniably  rife  that  as  a  sop 
to  public  feeling,  one  investigating  committee  after  an- 
other was  appointed  to  inquire  into  charges.  While  on 
this  subject,  digression  will  be  made  to  deal  with  two 
scandals  in  particular  which  came  up  at  this  period.  It 
is  well  worth  while  referring  to  these,  first,  because  they 
additionally  reveal  the  utter  corruption  carried  on  con- 
tinuously at  Washington  by  every  section  of  the  capital- 
i.-t  cla>s,  and  second,  because  they  disclose  some  of  the 
method^  by  which  one  of  the  most  lauded  multimillion- 
aire financiers  and  "  philanthropists  "  in  the  United  States 
built  up  his  fortune. 

This  was  William  W.  Corcoran,  a  Washington  banker, 
who,  after  the  Civil  War,  became  reputed  as  one  of  the 
most  substantial  and  respected  financiers  in  the  Uniteo 
States.  During  the  decades  when  Gould  and  Sage  were 
being"  hotly  denounced  for  their  frauds  Corcoran  loomed 
up  as  a  >taid,  conservative  banker  and,  a  man  of  accred- 
ited mo^t  honorable  pu-t.  lie  wa^  the  chief  partner  of 

work. 


the  banking  firm  of  Corcoran  and  Riggs.  and  bequeathed 
82.000,000  for  a  splendid  art  gallery  to  the  city  of  Wash- 
ington, and  he  also  established  a  home  for  decrepit  old 
women. 

A    SIDKWISK    (iLANCK    AT    A    NOTED    PHILANTHROPIST. 

Corcoran  was  another  of  the  many  capitalists  who 
contrived  to  assume  a  coating  of  protective  respectabil- 
ity. His  methods,  however,  were  of  the  same  fraudu- 
lent nature  as  those  of  all  the  other  successful  money 
getters. 

Evidences  of  what  these  methods  intrinsically  were 
came  out  in  1854;  they  made  such  a  rumpus  that  the 
House  of  Representatives  was  compelled  to  undertake 
some  investigation.  According  to  the  written  and  re- 
peatedly made  charges  of  I'enjamin  E.  Green,  a  political 
figure  of  the  period,  Corcoran  had  extensively  bribed 
public  officials  in  order  to  make  large  sums  of  money  out 
of  the  handling  of  United  States  funds  and  of  specula- 
tion in  them.  Under  the  treaty  of  Guaclulupe  Hidalgo, 
the  United  States  had  agreed  to  pay  Mexico  a  large 
indemnity  for  territory  ceded  after  the  Mexican  War. 
['art  of  this  sum  was  paid  by  1850,  but  a  considerable 
sum  -till  remained  to  be  settled.  Mexico  needed  money 
badly,  and  proposed  that  the  United  States  pay  it  di- 
rect! v  to  the  .Mexican  Government  without  the  inter- 
mediary of  banking  houses.  Green  charged  that  Cor- 
coran bribed  Thomas  II.  IJayly,  chairman  of  the  House 
Committee  on  Ways  and  Mean-,  so  to  mi-repre-ent  Mex- 
ico's proposition  rind  manipulate  matters  that  the  firm  of 
Corcoran  and  I'-iggs  -mould  be  made  the  middlemni  in 
iho  transaction,  "  1'avly."  charged  Green,  "held  a  con- 
trol over  all  <>f  the  appropriation  bills  in  most  of  which 


20) 

Corcoran  was  directly  or  indirectly  interested.'"18  Cor- 
coran  thus  obtained  the  handling  of  the  indemnity  funds, 
and  made  a  profit  of  about  $500,000  from  the  transac- 
tion.17 A  select  committee  of  the  House  of  Representa- 
tives made  a  show  of  investigating  the  charges  against 
Bayly,  and  reported  on  August  3.  1854,  a  case  of  "  not 
proved." 

THE    GARDIXRR-MEARS    SWIXDLF.. 

At  the  very  same  time  Corcoran  was  involved  in  an- 
other investigation  by  the  House  Committee  on  Judi- 
ciary—a committee  many  of  the  members  of  which 
were  themselves  corrupt  politicians.  The  transaction 
which  it  was  investigating  under  a  resolution  passed  by 
the  House  on  March  6,  1854,  was  the  great  swindle  per- 
petrated by  George  II.  Gardiner  and  John  11.  Mears 
upon  the  United  States  Government.  By  perjury, 
forged  affidavits  and  bribery  these  two  men  obtained 
8581,000  from  the  United  States  Government  upon  the 
representation  that  property  of  theirs  had  been  de- 
stroyed in  Mexico  during  the  Mexican  War.  After  the 
money  had  been  appropriated,  the  facts  as  to  the  "  as- 
tounding fraud"  (as  a  House  Committee  termed  it) 
came  out  publicly.  Both  the  Senate  and  the  Hou>e  in- 
vestigated the  transaction  ;  a  Senate  committee  reported 
that  the  claims  "  were  false  and  fictitious  and  the  award- 
obtained  upon  forged  and  fabricated  papers." 

115  Reports  of  Committees.  Thirty-third  Congress,  First  Session, 
Vol.  ni,  Uep.  Xt  i.  ,^4  :  4. 

17  Ibid. 

18  C.  S.  Senate  Report   Xo.    i8_>.   1854. 

Tt  \\  as  at  this  peni>d  that  vast  stretches  of  valuable  land  in 
the  Southwest  and  the  Pacific  States  were  bein,n"  obtained  by 
forced  documents  and  by  the  testimony  of  perjuring  Mexicans. 
See  Chapter  li.  Vol.  ii.  and  the  chapter  on  the  Klkins  fortune 
in  Vol.  iii. 


30         HISTORY    OP    THE    GREAT    AMERICAN    FORTUNES 

The  people  of  the  United  States  \vere  wrought  up  over 
the.  disclosures  of  this  bold  swindle,  and  Congress  was 
smitten  with  another  of  its  spasms  of  virtuous  curiosity. 
A  resolution  was  passed  calling  for  the  recovery  of  the 
money  paid  out  to  Gardiner  and  Mears.  But  were  these 
men  the  real  beneficiaries?  Who  actually  got  the 
money?  "Who  were  the  principals  behind  the  fraud? 
These  were  points  that  had  to  be  inquired  into. 

As  the  investigation  unfolded  it  appeared  that  a  group 
of  bankers  and  politicians  were  the  parties  backing  the 
fraud.  Possibly  they  instigated  it,  although  this  general 
belief  was  not  determined.  The  testimony  showed,  how- 
ever, that  when  the  forged  affidavits  were  being  prepared, 
money  was  urgently  needed  to  carry  the  projected  swin- 
dle to  a  successful  conclusion.  At  this  point  Corcoran 
came  forward.  He  loaned  818.750  as  funds  for  the 
promotion  of  the  swindle,  although  he  claimed,  when  the 
committee  was  investigating,  that  he  did  not  know  that 
this  money  was  used  to  buy  up  testimony  and  otherwise 
complete  the  chain  of  fraud.  But  he  admitted  loaning 
this  818.750  to  Robert  G.  Corwin  and  Thomas  Corwin. 
powerful  politicians  of  the  day:  in  return  he  received 
an  assignment  of  the  Gardiner  claim  as  collateral  se- 
curity." Thomas  G.  Corwin  later  was  appointed 
United  States  Secretary  of  the  Treasury,  and  it  was  by 
his  order,  under  an  act  passed  by  Congress,  that  the 
money  was  paid  out.  Of  the  8581.875  appropriated,  the 
sum  of  8321.562.50  was  nominally  in  the  name  of  Gar- 
diner himself,  and  8107.187.50  was  awarded  to  Cor- 
coran a-  the  assignee  of  Gardiner.  Both  of  these  sums. 
however,  were  paid  out  to  Corcoran  and  entered  on 
the  books  of  Corcoran  and  Riggs.  and  (so  the  report 


31 

has  it)  "credited  to  the  parties  interested."-"  Gardiner. 
while  being  prosecuted  for  perjury,  committed  suicide. 
The  bankers  and  politicians,  however,  whose  tools 
Gardiner  and  Mears  were,  did  not,  it  is  hardly  neces- 
sary to  say,  have  to  face  criminal  trial  or  any  other 
kind  of  trial,  except  a  friendly  and  evasive  investiga- 
tion. So  far  as  Corcoran's  complicity  was  concerned, 
the  committee  exoneratingly  whitewashed  him,  and  re- 
lieved him  from  any  legal  responsibility. 

It  is  probable  that  Sage  learned  many  valuable  lessons 
from  his  experience  at  Washington  ;  Corcoran's  particu- 
lar kind  of  banking  methods  must  have  opened  his  eyes 
to  possibilities.  At  any  rate,  already  a  millionaire,  or 
nearly  one.  from  the  combination  of  business  and  pi 'li- 
lies. Sage  now  went  into  the  banking  business  at  Troy, 
and  became  a  money  lender  and  usurer  on  a  large  scale. 
It  was  at  this  juncture  that  he  turned  up  as  one  of  the 
largest  bondholders  of  the  La  Crosse  and  Milwaukee 
Railroad.  He  had  become  associated  with  this  project 
at  about  the  time  he  was  in  Congress,  but  the  fact 
was  not  known  until  several  years  afterward,  when  he 
foreclosed.  The  eulogistic  biographer  in  "  America's 
Successful  Men,"  treats  Sage's  connection  with  the  La 
Crosse  and  Milwaukee  Railroad  in  this  light  fashion: 
1  The  panic  of  1857  found  Mr.  Sage  a  large  creditor  of 

-"  Rep.  Xo.  369.  etc.  Tt  is  pertinent  to  note  here  that  Riggs,  of 
the  firm  of  Corcoran  and  Rigg>.  \vas  accused,  in  1808,  of  handling 
a  corruption  fund  employed  by  the  Russian  Minister  to  the  United 
States  to  secure  the  passage  of  a  bill  appropriating  $7,200,000 
for  the  purchase  of  Alaska  by  the  United  States.  The  House 
Committee  on  Public  Expenditures  investigated.  Riu'gs  denied 
the  charges.  But  inasmuch  as  the  members  of  the  Rn^-ia;i 
Legation,  although  requested  to  appear  ar.d  explain,  refused  to 
do  so,  the  Committee  reported  its  investigation,  "barren  of 
affirmative  or  >atisfactory  negative  re>uhs." — See  Reports  of 
Committees.  Third  Session,  Fortieth  Congress,  i8(>8-<K(.  Report 


the  La  Crosse  Railroad.  .  .  .  To  protect,  the  loan.-. 
he  had  made  to  the  road  he  found  himself  compelled  to 
advance  yet  larger  sums,  and  later,  through  legal  pro- 
ceedings instituted  to  protect  his  investment,  he  became 
the  owner  of  the  road  which  afterward  became  a  part  01 
the  Chicago,  Milwaukee  and  St.  Raul,  of  which  Mr. 
Sage  was  at  different  times  a  director  and  vice  presi- 
dent." 


THE    BRIBERY    OF    AX    ENTIRE    STATE. 

This  explanation  reads  very  smoothly,  but  it  omits  a 
multitude  of  details  both  essential  and  enlightening.  It 
-can  be  said  that  at  a  period  when  briber}'  and  fraud  were 
so  common  as  to  cloy  the  popular  mind,  no  transaction 
aroused  a  greater  sensation  or  made  a  deeper  impression 
upon  a  people  jaded  with  continuous  exposures  of  brib- 
ery, than  the  great  thefts  and  briberies  committed  by 
the  owners  of  the  La  Crosse  and  Milwaukee  railroad. 

This  corporation  had  been  chartered  by  the  Wisconsin 
Legislature  in  1852  to  build  a  railroad  crossing  Wiscon- 
sin from  Milwaukee  on  the  eastern  boundary,  to  La 
Crosse  on  the  western.  Two  additional  acts  passed  in 
the  same  year  allowed  it  to  consolidate  with  two  other 
railroads  running  in  different  directions. 

In  June,  1856.  Congress  passed  a  bill  granting  to  Wis- 
consin approximately  2,388,000  acres  of  public  land  in 
that  State  to  be  distributed  among  the  railroads  in  Wis- 
consin. The  enactment  of  this  law  was  one  of  thirty 
distinct  railroad  land-grant  acts  passed  in  that  one  year. 
'!  hat  they  were  put  through  by  bribery  was  shown  by 
the  report  of  a  House  investigating  committee  which  rec- 
ommended the  expulsion  of  four  prominent  Congressmen 
on  the  ground  of  thrir  having  been  at  the  head  of  cor- 


33 

nipt  combinations  in  Congress.-1  The  La  Crosse  and 
Milwaukee  Railroad  Company  thereupon  lost  no  time  in 
bribing  (and  all  of  the  other  land-grant  railroads  did  the 
same  in  other  States)  the  Legislature  of  Wisconsin  to 
award  a  huge  land  grant.  \Yhat  followed  the  corrupt 
acts  of  Congress  would  doubtless  never  have  been  made 
public  had  it  not  been  for  the  fact  that  another  railroad 
company  was  sharply  competing  with  the  La  Crosse  and 
Milwaukee  Company  to  get  the  major  land  grant  from 
the  \Yisconsin  Legislature.  Beaten  in  the  contest  it  re- 
vengefully raised  charges  that  bribery  had  -been  used. 
The  result  was  the  appointment  of  a  joint  investigating 
committee  by  the  two  houses  of  the  Wisconsin  Legis- 
lature, and  it  is  from  their  report,  covering"  more  than 
three  hundred  pages,  and  handed  in  on  May  13,  1858, 
that  the  fullest  details  are  obtainable. 

This  committee  reported  that  in  the  construction  of 
the  La  Crosse  and  Milwaukee  Railroad  nearly  $1,700,000 
had  been  stolen  by  the  directors  up  to  1856.  One  method 
was  by  making  exorbitant  contracts  with  themselves  to 
construct  their  roads  ;  another  was  by  false  construction 
charges ;  a  third  was  by  their  buying  property  as  in- 
dividuals and  then  selling  it  to  the  company  at  exor- 
bitant prices.  These  fraudulent  methods  were  common 
among  the  directors  of  railroads  throughout  the  United 
States.  According  to  the  findings  of  the  committee,  the 
La  Crosse  and  Milwaukee  Railroad  directors,  composed 
of  \Yall  street  bankers  and  Xew  York  politicians,  had 
so  plundered  the  stock,  security  and  property  of  the 
company  that  it  was  reduced  to  a  condition  of  bank- 
ruptcy. The  plan  was  thus  made  imperative  of  getting 
a  large  land  grant  in  order  to  rescue  the  company  from 


34 


The  directors  at  this  time ;  his  holdings,  it  ap- 
pear.^, were  in  bonds  not  stocks;  lie  remained  in  the 
background  working1  through  intermediaries. 


SSOO.OOO    IX    I'.RIKKS   TO   r,KT    AX    ACT    PASSED. 

To  get  this  land  grant,  consisting  of  about  1,000,000 
acres,  the  La  Crosse  and  Milwaukee  Railroad  directors 
debauched  not  merely  a  few  leading  membe'rs  of  the 
Legislature,  but  virtually  the  whole  Legislature,  the  Gov- 
ernor and  other  State  officers,  and  a  large  number  of 
editors  of  newspapers  and  politicians.  It  was  this  whole- 
sale bribery  of  an  entire  State,  joined  with  the  general 
plunder,  robbery  and  sundry  swindling,  that  made  so 
uncommonly  deep  an  impression  upon  the  public  mind  : 
the  newspapers,  which  in  general  ordinarily  gave  scant 
space  to  accounts  of  bribery,  opened  up  on  this  occasion, 
in  evident  appreciation  of  the  nature  of  the  scandal,  and 
published  long  summaries,  in  some  cases  covering  a  page 
and  a  half  in  fine  print,  of  the  committee's  report. 

More  than  $800,000  in  bonds  and  money  —  but  chiefly 
in  bonds  • —  had  been  paid  out  in  bribes  to  insure  the 
passage  of  the  land-grant  act  of  1856,  the  committee  re- 
ported. This  was  an  underestimate.  According  to  the 
report  of  the  president  of  the  La  Crosse  and  Milwaukee 
Railroad  Company  to  the  stockholder-,  the  passage  of 
this  act  cost  $1,000.000  in  bonds.-"-  fn  his  annual  report 
for  1858  the  president  of  the  company  bewailed  the  fact 
that  the  passage  of  the  land-gram  act  had  cost  the  com- 
pany so  much.  He  itemized  the  expenses  incurred.  The 


mi7:  SAC.I:   FORTCM;  35 

first  was  this  brief  but  significant  entry,  "  Construction 
bonds  of  1862,  issued  for  (/barter  Expenses,  $i  ,000.000." 
'J'be  second  item  enumerated  in  the  list  of  expenses  for 
getting  the  land  grant  \vas  another  $1,000,000  spent  in 
the  purchase  and  consolation  of  the  St.  Croix  and  Lake 
Superior  Railroad,  which  railroad  was  awarded  847,000 
acres  of  public  land.-:;  A  third  entry  was,  "  Stock  is- 
-ncd  for  Charter  Expenses  at  Madison  [the  capital  of 
Wisconsin],  $90,000."  -4  A  fourth  item  was  one  of 
£210,000  "  for  services  "  in  getting  a  charter  for  a  branch 
railroad  called  the  Milwaukee  and  \Yatertown  Rail- 
road.'--"' 

Large  as  they  were,  these  expenditures  were  trivial 
compared  to  the  value  of  the  land  grants  received.  The 
annual  report  of  the  La  Crosse  and  Milwaukee  Railroad 
Company  for  1857  contained  a  statement  from  the  Wis- 
consin Land  Commissioner  setting  forth  that  the  areas 
granted  were  rich  agricultural  and  timber  lands,  and 
valuing  them  at  the  sum  of  $17, 345,600. -6  Seventeen 
million  dollars  in  return  for  a  disbursement  of  several 
millions  in  bribes  was  not  a  bad  business  transaction. 


BiU  to  revert  to  the  report  of  the  joint  legislative 
committee  of  Vv'isconsin  :  Ji  reported  that  for  the  pas- 
^age  of  the  land-grant  act  of  1850.  $175.00011]  bends  were 
distributed  among  thirteen  specified  Senators,  the  indi- 
vidual bribes  of  whom  ranged  from  $10,000  to  $20,000; 
that  $35",,ooo  in  bonds  had  been  given  in  bribes  to  sev- 

'•':;  "  Sixth    Annual    Hop.,  l".n   ("r 
•~>(  11. id. 
-'•-•  Ihid. 

-""The  Fifth   Animal   Reu.rt  .,{  tie  la  Cr 
R    K.  Co..   1857,"  k,,5  and    HX>. 


3*>          HISTORY    oF    Till:    C.KKAT    AMJ-IKJCAX 

entv  specified  Assemblymen  —  an  average  bribe  of  85.- 
ooo  —  :  that  850,000  in  bonds  were  given  as  a  bribe  to 
Coles  Hash  ford,  (dovernor  of  \\'isconsin.  and  816.000  to 
other  State  official-,  and  that  8246.000  bad  been  variously 
])aid  out  to  certain  specified  editors  and  to  other  persons 
of  influence.-7 

The  committee  reported  that  the  bribers  used  a  secret 
written  code  in  order  to  conceal  the  evidence  of  bribery. 
This  code,  however,  was  revealed.  The  committee  com- 
mented :  '  The  bribery  or  '  buying  up  '  a  great  majority 
of  the  Legislature  of  1856,  is  discovered  in  the  back- 
ground as  a  tame  fact,  while  the  ingenuity  displayed  in 
the  attempt  to  veil  the  transaction  beyond  the  possibility 
of  detection,  is  so  supremely  unique  as  to  extort  atten- 
tion. The  actors  seem  not  to  have  been  mindful  of  the 
fact,  that  no  lid  was  ever  large  enough  to  completely 
cover  up  itself."  ~* 

-"Report  of  the  John  Select  Committee  Appointed  to  Inves- 
tigate Into  Alleged  Frauds  and  Corruption  in  the  Disposition 
of  the  Land  Grant  by  the  Legislature  01"  1850  and  for  Other 
Purposes:  Appendices  to  [Wisconsin]  Senate  and  Assembly 
Journals.  1858. 

-s  Ibid..  47.  In  Wisconsin,  not  less  than  in  other  States,  large 
numbers  of  farmers  were  flagrantly  robbed.  The  robbery  of 
Nation,  States,  counties,  municipalities  and  individuals  proceeded 
at  the  same  time. 

Of  the  corruption  and  fraud  in  the  case  of  the  Milwaukee  and 
Superior  Railroad  Company,  an  investigating  committee  reported 
that  many  of  the  farmer-  in  Milwaukee  County  and  other  parts 
of  \Vi-con.-in  had  mortgaged  their  farms  in  order  to  rai.-e  money 
for  the  purchase  of  railroad  stocks.  These  fanners  "were 
anxiou-  to  aid  in  the  conduction  of  a  r<>ad  which  they  sup- 
TiO-ed  would  benefit  themselves  and  the  public  generally."  Many 
were  German-,  "confiding,  unsophisticated  men.''  The  commit- 
tee continued:  "A  swarm  of  the-e  vultures  known  as  'stock 
agents'  were  .-ent  out  amongst  the  people,  and  a-  the  result 
shows,  from  the  evidence  herewith,  many  poor  and  worthy 
men  have  been  robbed  of  their  all.  and  unless  some  relief  i- 
extended  to  them  in  some  way,  will  soon  be  deprived  of  their 
h.ou-e.-.  if  >aid  mortgage.-  are  of  any  legal  effect."  .  .  Re- 
port of  Select  Committee  Appointed  I'nder  Resolution  Xo.  128, 
A-.-emblv,  to  Investigate  the  Affair-  of  the  Milwaukee  and  Su- 


TIIK  S.U;F,  FokirxK  37 

"  The  evidence  taken."  the  committee  concluded,  "  es- 
tablishes the  fact  thai  the  La  Crosse  and  Milwaukee 
Railroad  Company  have  been  guilty  of  numerous  and 
unparalleled  acts  of  mismanagement,  gross  violations  of 
duty,  fraud  and  plunder.  In  fact,  corruption  and  whole- 
sale plundering  are  common  features."  -" 

The}-  were  not  merely  common  features  of  the  rail- 
road corporations  in  "Wisconsin,  but  everywhere  else  in 
the  United  States ;  year  after  year  they  went  on  un- 
hindered by  legislative  or  Congressional  investigations. 
The  stolen  rights  and  property,  far  from  being  forfeited, 
became  strongly  riveted  vested  rights  ;  neither  the  bribers 
nor  the  bribed  were  troubled  with  criminal  prosecution 
except  very  rarely,  and  then  it  was  only  the  subordinate 
tools  who  were  sent  to  prison.  Every  bribery  scandal 
would  be  shortly  followed  by  some  new  scandal ;  the 
old  would  die  away  or  become  forgotten,  and  the  new 
would  absorb  public  attention  for  a  time,-  only  to  go 
through  the  same  process. 

Yet.  under  a  noted  decision  of  the  Supreme  Court  of 
the  United  States,  the  principal,  in  every  transaction 
coming  within  the  law,  wras  fully  liable  to  punishment. 
In  January,  1829.  in  a  suit  brought  by  the  Government 
against  Astor's  American  Fur  Company,  growing  out 
of  a  seizure  by  General  Tipton  of  liquors  intended  for 
debauching  the  Indians,  that  court  had  laid  down  this 
principle  of  law  (  I'eter's  Reports.  II,  304)  :  That  what- 
ever was  done  by  an  agent,  in  reference  to  the  business 
in  which  he  was  at  the  time  cmloved.  and  within  the 


30         HISTORY    OF    Till-:    GREAT    AMERICAN    FOK'fl'XES 

civil  case,  in  all  respects  as  though  the  principal  were 
the  actor  or  speaker.  This  interpretation,  however,  was 
no  more  used  against  other  capitalists  than  it  was  against 
Astor. 

The  great  land  grants  received  by  the  La  Crosse  and 
Milwaukee  Railroad  Company  were  not  the  only  gifts 
in  the  legislative  acts  of  1856.  As  a  corporation  the 
company  was  forever  exempted  from  taxes,  and  the 
lands  granted  were  exempted  from  taxation  for  ten 
years  —  a  sufficient  time  in  which  to  strip  them  of  their 
timber  or  sell  them.  Despite  all  of  the  legislative  gifts, 
and  additional  very  valuable  donations  by  towns,  coun- 
ties and  cities,  the  railroad  had  been  so  consummately 
pillaged  of  its  money  and  resources,  and  so  difficult  was 
it  to  raise  money  in  the  panic  of  1857.  that  it  was  forced 
into  bankruptcy.30 

Xow  it  was.  as  his  biographic  limners  express  it,  that 
Sage  projected  himself  into  the  foreground  to  "  pro- 
tect his  interests."  How  he  did  it  they  do  not  tell, 
but  the  court  records  of  the  time  describe  his  methods 
with  considerable  plainness  of  speech  if  not  clearness  of 
explanation.  It  appeared  that  Sage  had  been  all  along 

;;"  In  the  testimony  before  the  \Yi.-consin  Joint  SeK-ct  Com- 
mittee of  1858,  Safe's  name  was  not  in  any  way  brought  out. 
It  is  certain,  however,  that  in  1857  Sage  wa-  a  controlling 
owner  of  the  La  Crosse  and  Milwaukee  Railroad.  The  investi- 
gating committee  reported  this  testimony  of  Premiss  Dow,  a 
sii  ckholdcr: 

"  In  August  and  September,  1857.  rumors  became  very  cur- 
••'•ni  in  Xcw  York  that  va.-t  frauds  had  been  committed  in  the 
management  of  the  affairs  of  the  company;  thai  the  funds 
raised  by  the  -ale  of  subscriptions  of  land  grant  bonds  had 
been  applied  to  other  purposes  than  building  the  road:  .  .  . 
thai  the  '  statement  '  of  the  cnmpany  was  unreliable,  as  to  the 
true  condition  of  the  company.  Many  of  the  holders  of  land 
:.:•  :  •  bonds  1  ecame  alarmed  and  sales  oi  them  were  made  as 
low  a-  twi-my  cents  on  the  dollar." — (Appendix  to  Assembly 
[ounial.  \Vi-consin.  1858.  p.  105.)  Perhaps  Sage  bought  more 
of  tin  bonds  al  this  lim»' 


Tin-:  SAC,]-:   KoirrrxK  39 

using  dummy  directors  and  agents  :  tliat  is  to  say.  he  had 
put  forward  certain  men  \vlio  nominally  were  the  own- 
ers and  active  spirits,  while  he.  under  cover,  was  actu- 
ally the  controlling  owner  and  moving  figure.  This  fact 
came  out  in  numerous  suits  which  were  carried  to  the 
Supreme  Court  of  the  United  States,  and  it  is  from 
the  records  of  this  august  court  that  certain  details  are 
obtained. 


FRAUH'LKXT    I'.O.VDS    .\.\I>    FKA  ClU 'LFXT    SALK. 

Sage  was  virtually  the  owner  of  a  two  million-dollar 
third  mortgage  issued  to  cover  the  eastern  division  of  the 
La  Crosse  and  Milwaukee  Railroad,  extending  from  Mil- 
waukee to  Portage  City,  or  about  half  the  breadth  of 
Wisconsin.  The  Supreme  Court  of  the  United  States 
set  forth  in  its  statement  of  the  case  in  1807  that  for 
these  $2.000.000  in  bonds,  not  more  than  $280,000  had 
been  paid  in  monev.  "  Indeed,"  said  the  Court,  "the 
actual  amount  is  but  a  little  over  $150,000.""''  f>y  what 
the  Court  called  "  a  fraudulent  arrangement,"  intended 
to  cheat  the  stockholders  and  the  creditors  of  the  road, 
thi<  third  mortgage  was  given  precedence  and  the  prop- 
ertv  was  foreclosed.  The  Supreme  Court  records  do 
not  show  how  Sage  got  hold  <>f  his  bond-,  but  they  do 
spread  out  that  the  fraudulent  Knid  issue  was  followed 
bv  a  fraudulent  foreclosure  sale. 


$200,000  in  money  was  paid.  The  remainder  of  the  two 
millions  was  in  the1  hands  of  either  directors  or  under 
their  control  by  a  fraudulent  arrangement."  The  Court 
denounced  the  foreclosure  a<  a  sale  made  bv  a  fraudulent 


.JO         HISTORY    ()!•'    Till!    GRKAT    AMERICAN"    F<  iRTf  XKS 

notice   iii    which    the   interested   parties  onlv  knew    what 
was  about  to  happen. r;- 

This  foreclt  -  1  eastern  division  of  the  La  Cros>e  and 
Milwaukee  Railroad  was  reorganized  as  the  Milwaukee 
and  Minnesota  Railroad  Company,  with  Russell  Sage 
as  its  president.  The  foreclosure  had  been  applied  for 
on  August  17,  1857.  It  would  seem,  therefore,  that 
Sage  had  become  a  heavy  bondholder  during,  or  im- 
mediately after,  the  very  time  when  the  acts  were  being 
bribed  through  Congress,  and  that  he  was  one  of  the 
largest  bond  creditors  at  the  identical  time,  or  soon  after, 
the  La  Crosse  and  Milwaukee  Railroad  Company  had 
corrupted  the  entire  State  of  Wisconsin  with  $800.000 
in  bonds  as  bribes.  But  the  precise  date  of  his  becom- 
ing connected  with  the  railroad  is  not  altogether  clear  in 
the  records.  After  the  foreclosure  sale,  some  of  the 
stockholders  and  many  of  the  creditors,  comprising  firms 
which  had  supplied  material  for  the  construction  of  the 
railroad,  objected  to  being  cheated.  A  number  of  legal 
actions  ensued  :  these  were  also  carried  to  the  Supreme 
Court  of  the  I  nitcd  States,  and  from  them  additional 
facts  can  be  gleaned. 


One  of  these  cases  considered  by  this  court  in  1863 
was  that  of  several  banking  firms  representing  Sage,  in 
an  action  against  the  La  Crosse  and  Milwaukee  Railroad 
Company,  the  purpose  of  which  >nit  clearly  was  to 
swindle  the  stockholders  and  judgment  creditors.  On 
the  face  of  the  action,  it  was  necessary  that  Sage's  Mil- 
waukee .anil  Minnesota  Railroad  ( 'ompany.  as  the  suc- 
cessor in  part  of  the  original  company,  should  mnke  a 

"-Wallace's   Reports.  Supremo  Court  of  tin-  I'nited  State.-,  vi : 


4' 

defence,  but  very  curiously  it  made  none.  There  was 
something  very  singular  about  this  omission  ;  what  it  was 
came  out  in  the  intervening  application  of  defrauded 
stockholders.  The  records  of  the  case  of  I'ronson  et  al 
vs.  The  La  Crosse  and  Milwaukee  Railroad  Company 
read  : 

After  the  lime  had  expired  within  which  the  Milwaukee  and 
Minnesota  Railroad  Company  ought  to  have  answered.  Inn  lie- 
fore  an  order  had  been  entered  taking  the  bill  against  them  pro 
ci'iijcsso,  one  J.  S.  Rockwell,  a  stockholder  of  the  said  com- 
pany, presented  to  the  court  his  petition,  charging  collusion 
between  the  complainants  or  their  agents,  and  one  Russell  Sage, 
president  of  the  said  Milwaukee  and  Minnesota  Railroad  Com- 
pany, to  secure  a  foreclosure  and  sale  in  their  cause ;  for  the 
purpose  of  extinguishing  the  rights  of  the  said  Milwaukee  and 
Minnesota  Railroad  Company,  which  was  alleged  to  be  the 
owner  of  the  equity  or  redemption  of  the  mortgaged  premises; 
and  that  the  president  [Sage]  of  the  last  named  company,  al- 
though requested  by  its  stockholders,  had  declined  to  make  any 
defense  in  its  cause/'" 

Obviously,  for  the  scheme  afoot  was  to  so  tangle  up 
the  affairs  of  the  company  in  legal  hocus  poctts  as  to  have 
a  valid  ground  for  absolutely  cheating  (or  as  the  term 
went,  "freezing  out")  the  stockholder-  and  judgment 
creditor.-,  Four  years  later,  as  we  have  just  noted,  the 
Supreme  Court  of  the  I  nited  State-  found  it  so  in  decid- 
ing another  case. 

Rockwell  was  not  the  only  stockholder  charging  col- 
lusion. .Another  stockholder,  Fleming,  presented  a  peti 
tion  making  a  number  of  charges  of  which  collusion  was 
mcrrlv  one.  lie  also  charged  that  the  mortgage  issued 
hv  ihr  La  Crosse  and  Milwaukee  Railroad  Companv  rcp- 
resented  whai  was  popularlv  known  as  "Corruption 


42 

Bonds  "  and  was  gotten  up  "  for  the  corrupt  and  fraudu- 
lent purpose  of  disposing  of  said  bonds,  or  a  large  part 
thereof,  in  payment  of  pretended  debts  to  the  officers  and 
agents  of  said  company,  or  their  friends,  without  any 
consideration  to  be  paid  therefor."  Also,  "  that  a  large 
part  of  said  bonds  were  so  disposed  of  and  given  away 
in  fraud  of  its  creditors.''  ['A  The  attorney  for  the  com- 
plaining stockholders  said  in  summing  up  the  case : 
"  Men  placed  to  manage  corporations  for  the  interest  of 
the  stockholders  manage  them  only  for  their  own.  They 
become  contractors,  half  ruin  the  corporation,  pay  them- 
selves with  its  assets  at  enormous  discounts,  then  resus- 
citate things  and  are  rich  in  the  result."  "~J  The  Supreme 
Court  of  the  United  States  subsequently  set  aside  the 
foreclosure  sale  on  the  ground  that  it  was  fraudulent, 
but  Sage,  by  other  means,  succeeded  in  keeping  his  hold. 

These  are  the  authentic,  exact  legislative  and  court 
records.  Entirely  different  are  the  facts  they  reveal 
from  the  phrase  going  the  rounds  of  the  press  at  Sage's 
death  couched  in  this  or  similar  language.  "  Perhaps  the 
most  noteworthy  fact  in  the  accumulation  of  Mr.  Sage's 
fortune  is  the  absence  of  graft."  And  likewise  very  dif- 
ferent are  they  from  the  statements  given  in  the  lu- 
dicrous "  histories  "  prepared  by  the  railroad  corporations 
t  hem-elves. 

\Yhile    Sage   was    foreclosing   the   eastern    division    of 

La  Crossc  and  Milwaukee  Railroad,  he  was,  at  the 

.me   time,    foreclosing,   by   reason   of   his  holdings,   an- 

>.',her  division  which  likewise  became  a  part  of  the  C'hi- 

•;-!  Wallace's  Reports,  etc.,  ii  :  -'^7.  This  is  one  instance  uf 
manv  more  -itch  instances  clearly  revealing  the  real  nature  <>t 
-1"-  "ability"  •  italists  in  "developing  the  resource?  of 

thr  country.''  "Ability"  it  wa-  <>f  its  kind,  and  one  wholly  used 
for  plunder  ,-Mid  per-mal  enrichment. 

'•'••<  Ibid..  J05. 


Till':  SAG!-:  FukTuxi-:  43 

cago,  Milwaukee  and  St.  Paul  Railroad  system.  Thi> 
other  division  was  the  Milwaukee  and  lloricon  Railroad, 
which  was  part  and  parcel  of  the  continuous  corrupt 
transactions.  The  "historian"  of  the  Chicago,  Mil- 
waukee and  St.  Paul  system  writes  of  the  episode  in  this 
uninforming  way:  "The  Milwaukee  and  Horicon  Rail- 
road, incorporated  in  1852,  was  foreclosed  hy  Washing- 
ton Hunt  and  Russell  Sage  in  1863  and  by  them  trans- 
ferred to  the  Chicago,  Milwaukee  and  St.  Paul  in  June, 
1863."  :;e 

The  enormous  frauds  in  Wisconsin  were  only  a  part  of 
Sage's  activities  at  this  period.  At  the  same  time,  he 
and  his  fellow  capitalists  were  contiguously  carrying 
through  similar  fraudulent  operations  in  Minnesota. 
Were  it  not  that  occasionally  the}-  fell  to  quarreling  over 
the  spoils,  and  let  out  secrets  in  the  civil  courts,  we 
should  be  at  a  loss  to  know  the  precise  nature  of  their 
transactions.  As  it  is.  certain  records  of  lawsuits  sur- 
vive to  give  a  fairly  clear  index  of  their  methods,  and 
what  these  were  will  now  be  related  in  an  expository  out- 
line. 

"•""Outline  History  of  the  Chicago.  Milwaukee  and  St.  Paul 
Railroad  Company.  Compiled  hy  the  General  Passenger  De- 
partment. iSSS:"  2. —  The  chief  attorney  for  the  various  rail- 
roads merged  in  tln^  sy-tem  was  Samuel  J.  Tilden.  who  later 
posed  a<  so  ^reat  a  "  reformer  "  in  politics,  and  who  was  the 
Democratic  nominee  for  President  of  the  United  States  in  1870 
It  will  I".1  continuously  observed  that  the  men  nominated  hy 
both  political  panic-;  for  hiuh  office,  executive,  legislative  and 
judicial,  wi-re  invariahlv  tho-r  who  had  proved  their  u--rfulre  — 
a-  tools,  retainers  or  beneficiaries  of  the  corporate  interests. 
Witness  (iartield  and  I'laine.  implicated  in  the  Credit  Mobili  -r 
>windle,  Morton  and  manv  others. 


CHAPTER  II 
MORE  DETAILS  OF  THE  SAGE  FORTUNE 

In  the  preceding  chapter  \ve  have  seen  how,  by  corrup- 
tion and  fraud.  Congress,  in  1854.  passed  an  act  the 
wording  of  which  was  so  surreptitiously  altered  as  to 
give  nearly  nine  hundred  thousand  acres  of  public  land 
in  Minnesota  direct  to  the  Minnesota  and  Xorthwe>tern 
Railroad  company.  Composed  of  a  combination  of 
Eastern  and  Western  capitalists,  lobbyists  and  politicians, 
this  company  proceeded  to  regale  the  country  with  sonor- 
ous prospectuses  of  the  great  things  that  it  intended  to 
do  in  developing  the  wilderness  of  the  Northwest.  Could 
the  nation  doubt  the  veracity  and  noble  intentions  of  its 
charterers,  all  solid  men  of  capital  ?  Was  the  good 
faith  of  its  projectors,  headed  by  that  eminent  capitalist. 
Erastus  Corning,  of  Albany.  Xew  York,  to  be  ques- 
tioned? For  once  the  sweet  song  failed  to  charm  the 
public,  which  rose  in  angry  protest  against  the  corrup- 
tion used,  and  Congress  hastily  backslid  and  repealed  thv 
act.1 


MOKK    1)LTA[LS    ()!•'    Till-:    SACK     KURT  I  '  X  L  45 

It  \va>  not  often  that  Congress  repealed  such  corrupt 
acts ;  when  it  did  so.  astonishment  \vas  general. 


GIFTS    OF    KOTRTELX    MILLION'    ACRKS. 

But  the  good  behavior  of  Congress  was  of  the  briefest 
duration;  a  mere  ebullition  serving"  duty  as  something 
with  which  to  blind  the  nation.  The  milling  of  land- 
grant  bills  went  on  busily;  the  repealing  of  that  one 
particular  act  produced  an  effect  which  distracted  public 
attention  and  which  allowed  the  tmscrutinized  passage  of 
many  other  acts.  Among  these  were  measures  giving 
six  millions  of  acres  of  public  lands  —  eventually  to  ex- 
pand into  fourteen  millions  in  all — -to  the  Territory  of 
Minnesota  ('soon  to  become  a  State)  for  the  benefit  of 
railroad  corporations.  The  proprieties  of  the  usual  form 
of  procedure  were  now  scrupulously  observed  ;  the  lands 
were  donated  to  the  individual  States,  to  be  granted  by 
them  to  railroad  companies.  Congress  had  learned  its 
lesson  of  the  necessity  of  sticking  to  outward  forms; 
henceforth  in  the  case  of  State  grants  the  briberv  had  to 
be  dually  done,  part  at  Washington  and  part  at  the 
various  State  capitals. 

During  the  session  of  1857  a  modest  little  bill  went 
gurgling  through,  tranquilly  making  the  round-  of  the 
committees  and  becoming  a  law.  At  that  precise  time 
main'  another  act  was  being  dragged  out  to  daylight  as 
having  been  passed  by  bribery,  but  this  especial  bill 
wended  its  way  unobtrusively,  entirely  shielded  from  the 
searching  blaze  of  publicity.  It  was  an  act  incorporating 
the  Minnesota  and  Pacific  Railway  Company  to  build 
a  line  from  St.  Paul  to  St.  Anthony's  Palls  (now  the 
city  of  Minneapolis)  and  authorizing  various  extension^ 
in  different  direction-. 


4<>        .HISTORY    OP    THK    GRKAT    AMKRICAX    FORTUNES 

The  second  part  of  the  program  was  as  successfully 
accomplished  as  the  first.  The  Minnesota  Legislature 
was  applied  to  for  the  wherewithal  to  carry  this  enter- 
prising project  into  execution,  and  most  generously  did 
it  respond.  Sundry  legislative  acts  gave  to  the  railroad 
company  a  grant  of  ten  sections  to  the  mile,  six  hun- 
dred and  forty  acres  to  the  section,  the  title  to  succes- 
sive grants  to  vest  in  the  company  as  fast  as  every  twenty 
miles  were  completed.  But  these  were  not  the  only 
benefactions.  In  dulcet  appeals  the  company  informed 
the  citizens  of  the  State  that  it  needed  cash  also.  Many 
of  these  aforesaid  citizens,  hardy  pioneers  with  a  rough 
way  of  looking  at  aft  airs,  were  not  overcome  with  emo- 
tion at  reading  these  tender  appeals.  They  thought  that 
the  land  grant  was  quite  enough  of  an  encouragement. 
I  kit  the  Minnesota  Legislature  "  during  the  corrupt  ad- 
ministration of  Governor  Sibley," — as  contemporary 
writers  in  Minnesota  put  it  —  was  of  an  extremely  sus- 
ceptible nature,  incapable  of  refusing  a  request.-  An  act 
was  passed  authorizing  a  85,000,000  issue  of  bonds  — 
called  the  "Minnesota  State  Railroad  Bonds  "•  —  to  be 
handed  over  to  the  railroad  companies  in  that  State. 
Xot  all  of  this  amount  was  issued  ;  the  total  sum  turned 
over  to  the  railroad  companies  under  this  special  act  was 
about  $2,750.000.  Large  additional  sums  of  money  were 
then  contributed  by  counties  and  municipalities,  and  a 
"  smart  business  "  was  done  in  persuading  farmers  and 
merchants  to  invest  their  money  in  the  railroad. 

Whose  master  mind  \vas  behind  all  of  thi^     Russell 

'-'Legislative  corruption  was  almost  continuous  "The  nu- 
merous charters,"  complained  (lovcrnor  YV.  A.  (inrnian  to  the 
Minnesota  Legislature,  in  185(1.  "already  granud  in  Minnesota 
for  ferries,  lumbering,  manufacturing,  mining,  etc.,  i^  enough  to 
arouse  your  vigilance  on  ibis  subject."  Many  of  tho-e  char 
UTS,"  he  pointed  out,  "r:n-t  become  sources  of  immense  revenue 
to  the  corporators."— Minnesota  Council  Journal,  1856:91. 


MURK    DETAILS    OK    Till'    SAC]-:    I-OUTI    XI  _|~ 

Sage's.  Rarely  did  lit1  appear  loo  prominently  in  the 
foreground,  but  he  was  the  soft-treading  mail  who,  as 
was  later  revealed,  chiefly  profited  from  the  transaction 
of  the  .Minnesota  and  Pacific  Railroad  Company.  After 
getting  the  charter,  franchises,  rights,  land  grants,  fund- 
and  exemptions  what  did  he  and  his  partners  next  do? 
Valiantly  and  seductively  had  they  argued  for  induce- 
ments enough  to  make  it  possible-  for  them  to  open  up 
the  primitive  Xorthwest.  T>ut  the  moment  that  the  pri- 
mary object  was  obtained  of  securing  these  diverse  "  in- 
ducements." talk  ceased  and  the  work  of  filling  their 
capacious  pockets  began  with  a  grim  and  silent  earnest  - 
ness. 

First,  in  the  order  of  the  day,  came  the  customary 
freebooting  organization  of  a  construction  company,  com- 
posed of  the  identical  men  in  the  railroad  corporation. 
They  made  contracts  with  themselves  calling'  for  ex- 
orbitant payments;  and  then,  in  addition  to  these  great 
cribbings,  the}'  fraudulently  awarded  themselves  bonds  in 
return  for  pretended  services.  Along  with,  these  em- 
bezzlements they  placidly  set  about  to  cheat  the  small 
bondholders  and  stockholders,  and  to  fleece  the  creditors 
who  furnished  them  with  necessarv  supplies  and  equip- 
ment. 


The  thefts  were  carried  on  with  such  rapid  assiduity 
that  in  about  a  year  after  the  compam  had  been  char- 
tered, its  treasury  had  become  a  vacancv,  and  the  rail- 
road was  plunged  into  insolvency  and.  in  1^5^.  lore- 
closed.  Who  bought  it  in:  The  srltsame  men  who 
had  looted  it;  as  the  chiefs  of  the  construction  com- 
pany thev  had  taken  care  to  fortify  themselves  with 
enough  bonds  to  put  them  in  the  legal*  position  oi  ma- 


jority  creditors.  Some  of  them,  such  as  Sage,  did  their 
work  generally  through  dummies;  others  appeared  in 
[lie  open.  They  might  complain,  as  they  did,  that  the 
cause  of  the  company's  failure  was  the  difficulty  in  rais- 
ing money  during  the  panic  of  1857;  but  this  was  a 
flimsy,  although  plausible,  excuse. 

Presently  a  unique  development  turned  up.  They 
caused  the  railroad  corporation  to  be  dubbed  with  two 
new  names;  by  an  act  slipped  through  the  Minnesota 
Legislature,  the  Minnesota  and  Pacific  Railroad  Com- 
pany was  reorganized  into  two  divisions,  one  called  the 
St.  Paul  and  Pacific,  the  other  the  First  Division  of  the 
St.  Paul  and  Pacific  Railroad  Company. 

Why  these  separate  titles  for  a  single  railroad  proj- 
ect? Why  this  confusing  arrangement?  The  reason 
became  obvious  a  little  later.  It  was  an  adroit  artifice 
to  entrench  them  in  a  strong  legal  vantage  to  loot  and 
bankrupt  the  road  still  further;  the  same  coterie,  in 
reality,  directed  both  companies,  and  as  constructors 
of  a  railroad  which  they  themselves  directed,  they  could 
hand  over  to  themselves  bonds  making  them  unassail- 
able creditors  of  the  whole  line.  An  astute  piece  of  in- 
genuity ;  who.-c  was  the  deft  brain  that  conceived  the 
device?  It  was  that  of  the  "great  reformer."  that 
evangel  of  ''pure  and  uncorrupted  Democracy  "•  — Sam- 
uel |.  Tilden.  lie  wove  his  legal  tangles  so  well,  so  very, 
very  well,  that  the  small  bondholders  and  the  manu- 
facturer- who  had  furni-hed  materials,  found  themselves 
before  long  entirely  cheated  out  of  their  claim-,  and  with 
no  chance  of  !•  c^l  rerlref  5. 

One  of  these  bondholders.  Edward  C.  TTopkin-.  with  a 
wonderful  trr  '  in  the  equity  of  law.  bestirred  himself 
to  -ee  vvheth;  .  •  t'ld  not  collect  on  -ome  coupons  of 
bond-  that  Iv  o\vred  <•'.  the  old  Mirme-otn  and  Pacific 


Railroad.  \\  as  not  (lie  St.  I'aul  and  1'acilic,  he  claimed, 
the  successor  of  the  original  company,  and.  therein 
bound  to  respect,  and  pay,  its  debts?  Was  it  not  a  case 
ot  an  old  corporation  acting  under  a  new  name?  Th  • 
case  came  up  for  trial  at  St.  Paul  in  the  I  nited  Stai. •- 
Circuit  Court.  The  eminent  and  erudite  judge  was  ]ivh:i 
F.  Dillon  —  the  very  Dillon,  fittingly  enough,  who  sub- 
sequently  left  the  bench  to  become  pleader  for  corpora- 
tions in  which.  ( lould  and  Sage  were  the  principal  direct- 
ing spirits. 

Judge  Dillon  handed  down  some  choice  bolts  of  law 
which  served  sufficient  notice  on  other  small  fry  of  cred- 
itors as  to  what  they  could  expect.  The  scope  of  his 
decision  was  superbly  direct;  he  held  that  when  the  Leg- 
islature of  Minnesota  changed  the  name  of  the  company 
in  1862  it  created  an  entirely  new  corporation  which 
could  not  be  held  responsible  for  the  debts  of  the  old. 
Hopkins'  suit  was  ejected  from  the  court,  and  both  lie 
and  the  other  creditors  were  left  to  ponder  in  unbroken 
leisure  upon  the  mysterious  beauties  of  the  law." 

But  if  the  company  had  a  new  name  —  or,  rather,  two 
new  names  —  it  retained  all  of  the  franchises,  privileges 
and  immunities  of  the  old  corporation  —  so  ran  the  de- 
cision. From  its  debts  it  was  relieved;  in  all  its  assets 
and  possessions  it  was  secured.  There  was  the  great  and 
important  point:  name-  were  but  a  serviceable  mask  un- 
der cover  of  which  the  "insiders"  could  defraud  the 
lesser  capitalists.  To  note  the  plaintive  squeaks  of 
these  outraged  victims  was  a  lesson  of  itself  —  they  who 
\\ere  only  too  eager  to  share  in  the  fruits  of  the  bribing 
of  public  bodies,  the  wrestling  of  public  resources  and 
the  general  despoliation  of  a  whole  people.  Their  fine 


moral  instincts  were  quickened  only  when  the}-  were 
defrauded,  and  then  their  virtuous  indignation  was  un- 
bounded. 

HUGE   SriiSIDlKS  STOLEN*. 

\\  hile  the  projectors  were  cheating  out  this  crowd  of 
dupes  what  were  they  doing  with  the  huge  subsidies 
that  they  had  received  in  one  form  or  another  with  which 
to  build  the  railroad  ?  The  money  had  certainly  van- 
ished. \Yhere?  Little  of  railroad  construction  was 
there  to  show  for  the  alleged  expenditure  except  some 
hundred  miles  of  graded  prairie.  Even  the  short  stretch 
of  ten  miles  of  main  line  from  St.  Paul  to  Minneapolis 
had  not  been  put  into  operation  by  1862  as  required  by 
law.  \Yhy  not?  The  rapidity  with  which  such  fortunes 
as  Sage's  were  being  amassed  was  the  answer.  The 
money  was  stolen. 

When  the  professional  corrupters  who  had  looted  this 
railroad  had  originally  applied  to  Congress  and  to  Min- 
nesota for  gifts  of  land  and  money,  they  had  represented 
themselves  as  capitalist-  having  "  ample  resources  "  with 
which  to  carry  on  the  project.  All  that  they  needed,  was 
their  plea,  was  State  encouragement  in  some  form,  be- 
cause "  the  undertaking  was  so  expensive."  After  they 
had  robbed  the  railroad  into  bankruptcy,  a  special  com- 
mittee of  the  Minnesota  Senate  began  to  investigate  their 
antecedents  and  methods.  "  The  sequel."  it  reported, 
"  demonstrated  that  the  companies  had  no  ca^h  capital  at 
command,  and  scarcely  credit  sufficient  to  insure  prompt 
location  of  their  line-  of  road."4  The  committee  went 


4  Report    of    Special    Committee    on    Railroads    and    Railroad 
dram-.    February    .3,    1860.    Minnesota    Senate    Journal    1850-60: 


MORI-:    DKTAI  I,S    OK    T  1 1  K    SACK    K(  WIV  N  !•:  5! 

So  far  as  your  committee  can  discover,  the  companies,  >incc 
the  passage  of  the  loan  amendment,  have  not  furnished  one 
dollar  of  capital  to  aid  in  carrying  on  their  gigantic  enterprise. 
They  have  sold  and  hypothecated  large  portions  of  the-e  bonds 
at  a  ruinous  discount.  They  have  paid  extravagant  salaries  \.> 
incompetent  or  inefficient  officers.  With  the  exception  of  ab  air 
fifty  miles  of  well-built  superstructure  —  incomplete,  fragme1.- 
tary  and  disjointed  portions  of  grading,  costing  on  the  average 
less  than  three  thousand  dollars  per  mile  —  are  all  that  these 
companies  can  show  in  return  for  the  munificent  issue  of  bonds 
made  to  them  by  the  State.5 

A  vivid  picture  this  gives  of  the  original  "  construct- 
ive ability"  of  the  capitalists  —  an  ability  conspicuously 
displayed  in  perpetrating  the  most  enormous  frauds. 
But  where  in  the  United  Stales  was  it  not  likewise  so? 

The  successive  events  now  following'  in  the  history  of 
this  company  are  dryly  incorporated  in  the  records  of 
the  case  of  John  S.  Kennedy  and  Company  vs.  the  St. 
Paul  and  Pacific  Railroad  Company,  including  the  First 
Division,  the  Northern  Pacific  Railroad  Company,  Rus- 
sell Sage,  Samuel  J .  Tilden,  et  al.6  Although  the  full  de- 
tails are  not  by  any  means  spread  out  in  these  records, 
some  authentic  particulars  can.  at  any  rate,  be  gleaned. 

By  187  r  Sage  and  his  associates  had  completed  certain 
of  the  railroad  extensions,  and  had  mortgaged  them  for 
a  total  of  $13,380,000.  Nearly  all  of  this  money  had 
been  advanced  by  banking  houses  in  Holland.  But  sixty 
miles  of  main  line  were  still  in  an  uncompleted  state,  and 
the  people  of  the  State  were  getting  dangerously  curious 
to  know  why.  Millions  of  dollars  had  disappeared;  all 
of  the  gifts  in  land  and  money  made  to  the  company 
had  been  sunk  thus  far  in  building  only  some  discon- 
nected and  semi-worthless  sections  of  the  projected  rail- 


road.  J  hr  directors  had  10  make  a  move;  tliey  did  so  In 
evolving  a  new  scheme  for  bleeding  the  too  eager  and 
credulous  Holland  capitalist.-. 


And  this  is  what  they  did  :  A  group  of  men  com- 
prising the  First  Division  of  the  St.  Paul  and  Pacific, 
corporatively  met  and  issued  bonds  for  815.000.000. 
The  same  men,  or  their  tools,  then  met  as  directors  of  the 
St.  Paul  and  Pacific  tit  is  hard  to  keep  these  fine  dis- 
tinctions in  mind  )  and  mortgaged  the  right-,  franchises, 
and  property,  including  the  land  grant-,  to  the  First 
Division  for  ninety-nine  years.  Then  the  First  Division 
corporation,  a-  construction  company,  bound  itself  to 
i  ;  !ele  the  railroad  extensions  before  .March  I.  1873, 
on  which  date,  by  a  recent  legislative  enactment,  the  land 
grant  was  to  be  forfeited  in  case  the  extensions  were 
not  built. 

'i  he  terms  of  the  mortgage  were  explicit  and  entic- 
ing. The  whole  of  the  815,000.000  was  to  be  applied  to 
building  the  extensions.  On  the  strength  of  this  agree- 
ment about  SS.ooo.ooc)  more  was  rai-ed  in  Holland  in 
1871.  Put  there  was  one  bit  of  information  the  Sage 
e  carefullv  kept  from  the  Holland  capitalists.  They 
did  not  tell  the  Hollanders  that  a  large  part  of  the  money 
raised  was  to  be  applied  to  the  main  line,  in  violation  of 
the  express  term.-  of  the  mortgage.7 

What  was  done  with  the  S8.ooo.ooo  rai-ed  in  Holland? 
Th.i-  ••••  .  '  ieh  the  borrowers  swore  on  -olemn  oath  to 


.MOKI:  i>i:i. \ii.s  oi-'    r:n.  SACK   IO^TCNK  -i 

die  1 !' 'llauders,  was  to  be  used  entirely  for  constructing 
the  extension  lines,  was  immediately  distributed  in  vari- 
ous plundering  \vavs.  About  83.000,000  of  it  was  frau •!- 
nlently  diverted  t<.)  the  completion  of  the  main  line;  large 
Minis  wore  grabbed  to  pay  interest  on  the  main  line 
mortgage  bonds,  and  other  millions  were  used  for  what : 
For  the  purchase  of  iron  material  and  the  payment  of 
contractors  for  work  on  the  extension  line.  And  who 
sold  the  iron?  The  First  Division  Company.  The  op- 
eration was  simple;  Sage,  etc.,  sold  to  themselves  the 
rails,  and  charged  the  account  against  the  money  ad- 
vance,! by  the  Dutch  capitalists.8 

Those  were,  indeed,  halcyon  times  of  bold  graft;  the 
robbery  was  so  large  and  openhanded  that  naturally 
enot:;.!'h  the  First  Division,  the  treasury  of  which  was 
sacked  as  fast  as  it  was  tilled,  went  into  insolvency  in 
1872.  In  less  than  a  year  more  than  £8.000,000  had  been 
''scattered'';  we  -hould  say,  concentrated,  for  the  great 
bulk  of  it  went  into  the  pockets  of  a  few,  and  remained 
there.  Xor  was  this  all.  "When  the  First  Division  sus- 
pended work  in  October,  1872,  it  owed  its  contractors  — 
subordinate  firm-  who  reallv  did  the  constructing  work 

1    reduced   this   debt 


Tricked  and   stripped,  the   Dutch  capitalist-  now    full) 

•(]    their    predicament;    the    monev    that    tlu-v    had 

•kir.ned    from  native  peoples  at   home,  had  been   plucked 

from  them.      Mow  could  ths   •  recover  it  ?     Thev  took  the 


only  blep  that  they  could  possibly  take,  which  was  to 
apply  for  a  receiver.  Hence  the  suit  brought  by  John 
S.  Kennedy  and  Company,  acting  for  them  and  for 
oilier  bondholders.  In  cold  legal  phraseology  they  set 
forth  their  plaint;  they  had  been  lied  to  and  defrauded. 
'They  I  the  bondholders]  also  claim,"  reads  the  formal 
court  statement,  "  that  by  reason  of  the  insolvency  of  said 
First  Division  Company,  and  of  various  fraudulent  and 
improper  acts  of  its  managing  officers  —  which  are  not 
here  recited  because  the  court  does  not  deem  it  material 
to  the  real  merits  of  the  application  —  that  a  receiver 
should  be  appointed,"  etc.,  etc.0 

Judge  Dillon  concurred  that  a  receiver  should  be  ap- 
pointed. L'rgent  reasons,  he  said,  compelled  it.  The  com- 
pany had  a  great  land  grant  valued  at  S6  an  acre;  and 
this  was  the  only  adequate  security  for  the  $15,000,000 
mortgage.  I'ut  it  happened  that  these  land-,  or  a  large 
part  of  them,  were  to  be  forfeited  if  certain  extensions 
were  not  completed  bv  a  certain  time.  It  was  imperative. 
Dillon  said,  to  save  that  land  grant,  and  as  the  directors 
of  the  road  admitted  that  there  was  no  money  in  the 
treasury,  it  was  to  the  best  interests  of  the  bondholders 
to  have  a  receiver  appointed.  The  receiver  would  have 
authority  to  complete  the  extensions.  Dillon,  thereupon, 
on  September  i,  1875,  appointed  one  Jesse  P.  Farley  a< 
receiver. 

The  next  developments  were  revealed  in  the  -econd 
-"it  of  John  S.  Kenned\-  and  Company  against  the  St. 
Paul  and  Pacific  Railroad.10 

!'lJill<in'-    f'iro'iil    Court    Report-,    1879-80.    v:  451-459. 
'hiii      '      Circuit    Court    Reports    1879-80,    v:  519-536.     Ken- 
'    .    iiov.-ever,    lift  rayed    the-    inu-rf-.t.s    of    tlv    Dim-h    -un-khold 
.  i-n'lu'k'fl    with   the   rc-ceivi-T.  an*!   made  a    fraudulent    .-irrange- 
l>y    'viiich    IK-    i  KIT;-  i-dy  )    profited    i/normously.     Kennedy 
••  my    of    tlu-   millions,   the   dunation    nf    ,-,r.mc   of 


Farley,  it  seems,  made  a  great  ado  about  the  construct- 
ing work  he  was  doing,  but  as  a  matter  of  fact,  he  spent 
only  about  ,$100,000  in  the  work  of  constructing  and  re- 
pair.11 However,  he  kept  up  the  pretense  enough  lo 
save  for  a  time  that  part  of  ihe  land  tyrant  threatened 
with  forfeiture.  lUit  by  1878  the  people  of  Minnesota 
were  again  ablaze.  Twenty-one  years  had  passed  since 
the  company  had  been  chartered;  it  had  received  v;ist 
subsidies  in  mouev  and  land  not  only  from  the  Xational 
( Government,  the  State,  cities  and  counties,  but  from  in- 
dividuals. All  along  its  route,  both  completed  and  pro- 
jected, farmers  and  merchants  had  subscribed  for  its 
stock,  only,  they  found,  to  hold  worthless  bits  of  paper 
which  produced  neither  railroad  nor  returns.  The  com- 
pany had  looted  itself  twice  into  insolvency  ;  it  had,  by 
repeated  sleight-of-hand  process,  defrauded  not  only  na- 
tive capitalists,  farmers  and  merchants,  but  it  had  done 
away  with  the  many  millions  poured  in  by  the  Dutch 
capitalists. 

TIIK    LKC.ISLATURK    WAKES    fl>. 

Xow  it  was  still  deep  in  bankruptcy.  The  Legislature 
could  not  hold  out  against  this  overwhelming  expression 
of  popular  indignation.  On  March  <j,  1878.  it  passed 
an  act  declaring  that  unless  a  specified  number  of  mile- 
.-hould  be  built  bv  certain  dates,  then  the  uncompleted 
portions,  togaher  with  the  land  grant-,  rights,  franchise-. 
immunities  and  appertaining  propertv  "  shall  at  once  be 
and  become  absolutely  forfeited  to  the  Stale  of  Minne- 
soia,  without  nnv  act  or  cercmonv  whatsoever.1- 

a   "  iiiv.'it    philnnihro 


50         HISTORY    OK    THE    GREAT    AMERICAN     FORTUNES 

It  was  a  drastic  law.  and  some  action  had  to  be  taken 
at  once,  if  the  State  was  to  be  thwarted.  \Yho  would 
furnish  the  money  necessary  to  build  the  uncompleted 
sections,  and  thus  prevent  the  forfeiture  of  franchises 
and  land  grants?  Sage  and  others,  after  getting  out  of 
the  road  all  the  plunder  that  they  could  see  in  sight, 
had  retired  to  use  the  proceeds  of  that  piracy  in  repeat- 
ing their  transactions  in  other  directions.  The  railroad 
itself  was  in  a  deplorably  bad  shape,  thoroughly  disor- 
ganized, and  very  dangerous  to  travel  on.  It  had  little 
equipment  and  few  stations  or  depots  worth  considering. 
This  was  the  "  splendid  railroad  system  "  that  Sage  and 
his  clique  were  to  build  ;  this  was  the  result  of  their 
"  vast  constructive  ability!"  How  much  Sage  took  out 
of  the  project  in  spoils  we  are  unable  to  say;  there  is  no 
record  stating  the  sum  either  absolutely  or  approxi- 
mately ;  it  amounted,  most  certainly,  to  many  millions  of 
dollars. 

With  forfeiture  of  much  of  the  possessions  and  many 
of  the  rights  of  the  railroad  in  imminent  danger,  four 
men,  who  became  noteworthy  among  the  great  capital- 
ists of  our  time,  stepped  forward  to  get  control  of  the 
St.  Paul  and  Pacific  system.  These  were  James  J.  Hill, 
yclept  the  "  Jay  Gould  of  the  Xorthwest,"  and  three  other 
Canadians,  two  of  whom  attained  elevation  to  the  British 
peerage.  How  they  secured  control,  and  what  they  did 
thereafter,  forms  a  story  not  connected  with  the  Sage 
fortune:  it  will  be  found  in  full  in  the  chapter  on  the 
I  lii'i  fortune. 

Meanwhile  Sage  had  met  Gould  in  Troy,  and  had  re- 
moved to  Xew  York  city.  '  The  two  men."  says  the  ef- 
fr  ive  biographer  heretofore  quoted,  "made  nn  impres- 
-iun  upon  each  other,  which  afterward  deepened  into  a 


JAMES  J.  HILL. 
The  Railroad  Magnate  of  Minnesota. 


MOKK    DLTA1LS    UK    'I'  1 1  K 


57 


friendship  famous  in  financial  hi>tory."  Famous  or  in 
famous  whichever  way  you  prefer  to  view  it.  A  val- 
uable working  pair  the  twain  made  ;  Sage,  crafty,  som- 
ber and  reclusive  ;  Gould  supplying  the  public  audacity  : 
both  equal  in  inscrutable  wiles  and  stratagems.  The  one 
overcautious,  the  other  overreckless,  each  counterbal- 
ancing the  other.  A  prodigious  respect  Gould  learned  to 
entertain  for  Sage ;  the  one  associate  was  Sage  whom 
Gould  could  not  overreach  or  fleece. 

Subsequently  and  appropriately  enough,  Sage  hied 
himself  to  Xew  York  city  early  in  the  course  of  the  Civil 
War.  There,  in  Wall  street,  was  the  headquarters  of 
many  of  the  railroad  corporations  which  had  been,  and 
were,  bribing  and  plundering.  The  office  of  the 
LaCrosse  and  Milwaukee  Railroad  Company,  for  in- 
stance, was  there  ;  whoever  might  be  the  actual  physical 
builders  of  the  railroads,  the  owners  were  either  \\  all 
street  men  or  kindred  capitalists  — -  men  who  by  some 
species  of  fraud  or  theft  had  pushed  themselves  into  con- 
trol. 

And  there  also  in  Xew  York  was  the  scene  of  the 
greatest  activity  in  the  current  widespread  despoliation  ; 
from  there  radiated  the  plans  and  plots  which  later  re- 
solved themselves  into  colossal  swindles.  Had  the  cen- 
ter of  this  deviltry  been  elsewhere,  there  Sage  and  all 
the  others  of  the  brood  indubitably  would  have  flown. 


A  money  lender  on  a  great  scale  Sage  became;  he  in- 
vented a  special  svstem  of  tiMirv — -the  "put"  and 
"call"  system,  the  intricacies  *.>\  which  we  shall  not  at- 
tempt to  describe.  N'uw  cmsld  be  >een  what  he  \vu^ 


cluing  with  the  million.-,  that  he  was  stealing  in  Wiscon- 
sin and  Minnesota.1"  Ordinarily  he  would  loan  money 
at  high  enough  rates,  but  in  times  of  panic  and  Wall 
street  "squeezes"  he  demanded — -and  received  —  as 
much  as  two  per  cent,  a  day  or  sixty  per  cent,  a  month. 
Friends  or  enemies,  it  did  not  matter  ;  all  alike  had  to 
pay  the  enormous  interest  that  he  exacted  if  they  de- 
sired a  supply  of  ready  money  (which  he  always  kept 
on  hand  )  and  thus  save  themselves  from  defaulting  on 
contracts,  and  so  going  into  bankruptcy.  lie  was  one  of 
that  eminent  constellation  of  patriots  who  hoarded  gold 
when  it  was  most  needed  to  carry  on  the  Civil  War,  and 
refused  to  loan  it  except  at  the  most  incredibly  extor- 
tionate rates. 

At  this  time  little  attention  was  given  in  the  East  to 
railroad  operations  in  the  West;  the  newspapers  were 
almost  wholly  filled  with  reports  of  events  of  the  great 
Civil  War.  Few  knew  of  the  gigantic  thefts  and  frauds 
that  Sage  was  carrying  on  out  in  the  Xorthwest ;  and 
when  he  suddenly  became  known  as  a  multimillionaire, 
glowing  accounts  were  published  of  him  as  a  wonderful 
financier.  This  praise  was  always  modified,  of  course. 

in  And  also  in  Io\va.  in  the  railroads  in  which  State  he  was 
extensively  concerned.  The  capitalist.-,  owning  the  Sioux  City 
and  St.  Paul  Railroad  had  caused  it  to  be  built  in  such  a  zig- 
zag fashion  that  they  could  fraudulently  grab  even  larger  land 
trants  than  the  accommodating  acts  of  Congress  intended.  By 
i  dging  this  railroad  in  O.-ceoia,  Dickin-on  and  O'Brien  Countie-, 

>\va,  this  company  made  claim  to  iSo.  iS4.54  extra  acre-  of  public 
;and  in  those  countie-,  and  prevailed  upon  the  State  officials 


railroad  company  called  the  McGregor  \Ye~teni,  and  had  con- 
structed his.  line  through  thi>  very  territory.  He  demanded  a 
-hare  of  those  iSrj.ooo  acres,  and,  upon  refusal,  sued  the  St. 
I'.'iul  and  Pacific  Railroad  Company.  The  case  finally  came  up 
in  the  United  Stat<-~  Circuit  Com-!  in  lo\va,  on  January  20,  iXXj, 
when  Judge  Love  amiably  decided,  with  tine  judicial  impartial- 
:  y,  tl  .  f  the  two  -  •  ••.  '••  was  entitled  to  an  undivided 

.    •    'and  in  depute. —  Fc'K-ral   Reporter,  x  :  435  :  450. 


MORI';    UKTA1LS    Ol-'    "I' LIP:    SAdK     |-'<)KTl'M-;  5<j 

by  derision  of  his  extraordinary  stinginess,  and  detesta- 
tion of  his  hard  qualities.  But  there  were  those  who 
had  been  associated  with  him  who  smiled  at  the  stories 
of  his  "  wizard-like  "  performances  in  heaping  up  mil- 
lions ;  they  knew  what  his  attributed  necromancy  really 
was;  of  the  series  of  briberies,  frauds  and  thefts.  The 
particulars  of  at  least  one  more  transaction  in  which  he 
was  engaged  at  this  time  are  accessible,  however  much 
many  of  his  other  dealings  are  beyond  historical  reach. 

THE    PACIFIC    MAIL   Sl'lJSIDY. 

One  of  the  many  corporations  in  which  Sage  became  a 
large  stockholder  was  the  Pacific  Mail  Steamship  Com- 
pany. This  corporation,  as  we  have  noted  in  the  Yan- 
derbilt  chapters,  long  corrupted  Congress  to  get  preda- 
tory mail  subsidies  from  the  Government.  By  an  addi- 
tional act  passed  by  Congress  on  February  i/.  1865,  it 
received  another  heavy  Government  subsidy  for  carrying 
the  mails  between  San  Francisco  and  Asia  via  Hono- 
lulu. 

The  booty  was  so  rich  that  different  factions  of  capi- 
talists continually  fought  one  another  to  get  control  of 
the  company's  treasury.  We  find  from  law  suit  records 
that  in  1867  that  fine,  old,  massively  respectable  banking 
firm  of  Brown  Brothers  and  Company  was  one  of  the 
heaviest  stockholders.  In  its  own  name,  and  acting  for 
authorizing  parties,  it  held  77.831;  shares  of  a  total  of 
the  Pacific  Mail  Steamship  Company'.-  joo.ooo  shares  of 
capital  .-took. 

Like  the  firm  of  Phelps.  Dodge  and  Company,  the 
hanking  firm  of  Brown  Broihers  and  Company  was  pre- 
eminently repined  (as  ii  has  been  since]  to  be  one 
<>!~  the  "  old-fa-hioned  firms"  of  "strict  integrity."  To 


f>o      HISTORY  o 

be  sure,  ii  officially  knew  nothing  of  the  subsidy  bribing 
incessantly  going  on  ;  owners  of  enterprises  must  culti- 
vate ignorance  of  such  embarrassing  detail--.  And  could 
it  be,  as  William  Swinton,  a  noted  writer,  charged  in  a 
pamphlet,  that  the  "eminently  respectable"  Alexander 
llrown  and  his  associates  were  (in  our  modern  phrase- 
ology i  grafting  on  the  very  company  in  which  they  were 
stockholders  ?  Swinton  charged  that  they  held  a  con- 
trolling lien  which  amounted  to  ownership  on  boiler,  iron 
and  other  factories  which  supplied  the  equipment  of  the 
Pacific  Mail  Steamship  Company's  line.  A  faction  in 
December.  iXf»~,  was  seeking  hard  to  dislodge  them,  and 
they  were  successfully  fighting  back.  A  pretty  mess  it 
made  in  the  courts. 

Finding  that  Congix-ss  was  as  ever  in  the  bargaining 
mood,  the  owners  of  this  line  opened  fresh  negotiations, 
and.  with  such  brilliant  success,  that  another  act  was 
passed  in  1872  granting  an  additional  mail  subsidy  of 
S5OO.OOO  a  year  for  ten  years.  'I  lie  subsidy  plunder  was 
now  so  much  larger  than  before  that  the  contest  for  its 
possession,  or  rather  its  handling,  precipitated  a  still 
more  violent  ro\\-  among  its  owners.  With  some  ulterior 
end  in  view.  Le  (irand  Lockwood,  one  of  its  stockholders, 
publicly  charged  that  bribery  had  been  u-ed  to  get  the 
act  through  Congress;  Lockwood  was  certainly  not 
prompted  bv  moral  motives;  he  had  been  a  large  bene- 
ficiary oi  the  Credit  Mobilier  swindle.  The  House  of 
Representatives  took  on  a  look  of  pained  and  injured 
surprise,  bristled  up  with  indignation,  and  on  February 
jo,  1^73.  ordered  the  Wav-,  and  Mean-  Commitiee  I 
vestigate. 

Congress  did  not,  nf  course,  cxpec!   that   ihr  iu\v-ti  ;: 
ti'>n    would    realh    <!i-rl«-r   nnv    damaging    facts;   ii    ua- 
-anguinely   anticipated    that    the   inquiry   could   easily   be 


The  committee  was  not  elated  at  the  testimony:  it 
found  itself  compelled  to  report  that  "a  sum  of  nearly 
one  million  dollars  appears  to  have  been  disbursed  in 
some  sort  of  connection  with  the  passage  of  the  act," 
and  "  that  the  results  of  the  evidence  are  that  8565,000 
was  paid  out  to  lohbvists  ;  the  disposition  of  the  remain- 
ing $335,OOO  remains  in  doubt  upon  the  evidence  pre- 
sented." ir'  Russell  Sage  was  president  of  the  Pacific 
Mail  Steamship  Omipanv  at  this  time ;  he  was  haled 
up  to  testify,  which  lie  did  with  a  very  aggrieved  air. 
He  denied  having  been  connected  with  the  company  at 
the  time  that  the  subsidy  was  granted,  and  avowed  that 
he  knew  nothing  of  the  alleged  bribery.  If  we  are  to 
accept  his  word  that  he  was  not  concerned  in  the  brib- 
ery—  a  doubtful  acceptation,  since  in  other  matter- 
he  was  a  proved  perjurer  1G  then  what  he  probably  had 
done  was  to  wait  until  after  the  $5,000.000  subsidy  had 
been  granted,  and  then  had  manipulated  matters  to  get 
in  control  himself.  Xo  doubt  he  knew  full  well  of  the 
bribery,  and  it  is  a  possible  supposition  that  he  had  urged 

14  House  Report  Xo.  269.  Forty-third  Congress.  Second  Ses- 
sion. 1874-75,  ii  :  xvii.  Henry  Clews,  that  exalted  hanker  an?! 
moralizer,  wa>  one  of  the  directors  (luring  tin's  period. 

'•"'  Ihid.,  xviii. 

"'•  "  A  proved  perjurer." — l;or  years  Sage  swore  that  his  tax 
ahle  per-onal  property  did  not  exceed  $2.000.000,  and  even  lhi< 
amount  he  sought  to  have  reduced  or  wiped  oft'  the  tax  books. 
After  his  death  the  Xe\v  York  City  Tax  Ik-part  mem  prepared 
to  assess  taxes  on  at  least  ?.-o,ooo.fK.o  personal  property  inherited 
hy  his  widow,  hut  the  amount  of  r>- segment  was  greatly  re- 
duced  when  the  executor  of  hi-  will  -uhmitted  an  affidavit  claim- 
ing that  $\o.cx}i.).c.(;c>  of  th.e  Sage  cash  was  invested  in  non-taxahk' 


Lockwood  to  make  the  charges,  in  order  to  raise  a  pub- 
lic slew,  and  discredit  and  overthrow  the  clique  in 
power. 

At  all  events,  whatever  the  ins  and  outs,  there  was 
the  Pacific  Mail  Steamship  Company  with  its  large  sub- 
sidies obtained  by  bribery,  and  Sage  the  head  of  it  all  in 
1873.  So  far  as  the  identity  of  bribers  and  bribed  was 
concerned,  the  committee  professed  to  know  nothing. 
One  lobbyist.  Richard  1'..  [nvin,  testified  that  he  had 
paid  out  .^750,000  to  "ciluT  persons,"17  but  who  those 
persons  were  the  committee  said  that  it  did  not  know; 
it  had  ''  exhausted  every  resource  "  in  trying  to  find  out, 
but  in  vain.  As  usual,  it  was  the  "'  unregulated  lobby  " 
which  was  to  be  blamed  and  which  should  be  purged. 

So  much  for  Sage's  career  up  to  the  time  when  he 
and  Gould  conjoined  in  the  Union  Pacific  manipulation 
and  other  transactions.  What  they  and  other  capitalists 
associated  with  them  did  in  these  operations  will  now  be 
related. 

17  I  louse  Report,  No.  269,  etc.,  1874-75,  ii :  I23- 


CHAPTER  III 
THE  GOULD  FORTUNE  RESUMED 

When  haled  in  1887  before  that  inquisitorial  govern- 
mental body,  the  Pacific  Railway  Commission,  Jay  Gould 
vouchsafed  little  information;  such  as  was  elicited  from 
him  was  of  the  most  meager  character.  He  said  that  he 
had  become  the  owner  of  a  controlling  interest  in  the 
Union  Pacific  Railroad  Company  in  1873  by  the  pur- 
chase of  fine  hundred  thousand  shares,  and  that  these 
holdings  were  subsequently  increased  to  two  hundred 
thousand  shares.1  Sage  testified  that  he  himself  had 
begun  buying  Union  Pacific  stock  in  1868  or  i<8n~<).'-'  As 
soon  as  the  grasp  of  these  men  and  their  associates  was 
assured,  their  industriousness  began.  Without  any  in- 
termediate ceremony  two  hundred  thousand  shares  of 
stock  were  forthwith  issued,  all  certificates  of  nothing 
else  than  their  self-arrogated  power  of  present  and  fu- 
ture exploitation. 

This  manufacture,  without  any  interference  from  law, 
of  additional  titles  of  ownership,  was  only  one  of  their 
numerous  and  conterminous  activities.  Their  most  plas- 
tic and  successful  plan,  by  which  thev  were  enabled  to 
compound  loot  on  a  most  magnificent  scale,  was  that  of 
buying  in.  as  individuals,  various  railroads,  and  then 
-elling  them  at  exorbitant  price-  to  the  Union  Pacific 
Railroad  Company,  which  corporatively  they  controlled. 


64         HI: 


With  its  extraordinary  opportunities  for  self-enrich 
mcnt  on  a  great  scale,  this  plan  \vas  one  commonly  prac- 
ticed by  the  puissant  capitalists  of  the  times.  It  had  not 
In  any  means  originated  with  Gould  and  Sage  :  other 
railroad  capitalists  had  richly  profited  bv  it;  so  thor- 
oughly has  it  commended  itself  as  one  of  the  simplest 
and  most  effective  mean.-  of  transferring  wealth,  that  a 
long  -uccession  of  magnates  have  consecutively  availed 
of  it  to  this  very  dav.  Three  generations  of  Yander- 
bilt-  have  repeatedly  demonstrated  its  value;  those  illus- 
trious generalissimos  of  the  ranks  of  wealth.  J.  Pierpont 
Morgan  and  I7..  II.  llarriman.  have  been  two  more  of  the 
radiant  cluster  who  have  proved  it-  enduring  worth. 

I5y  this  fraudulent  process,  incalculable  sum-  of  money, 
mounting  into  the  hundreds  of  millions,  have  been  seized 
with  facility.  So  pregnant  with  spoils  has  it  been  that 
even  the  I  nited  States  Industrial  Commission  of  1901, 
distinguished  for  its  easy-going  conventions  and  acquies- 
cent attitude,  could  not  forbear  saying  in  its  mild,  defer- 
ential way  of  transactions  in  which  buyer  and  seller  were 
the  same  parties :  "  The  possibilities  of  fraudulent 
profit-  are  something  enormous  under  such  condition?. 
Kormerlv  transactions  of  this  kind  were  often  enected 
bv  individuals  who  represented  another  person,  or  by 
families  who  were  dominant  influences  in  the  directorate. 
\\iih  the  enormous  increase  both  in  number 
and  magnitude  of  such  Iran-actions,  the  capital  required 


now  exceeds  the  actual  investment  capacity  of  any  except 
a  few  great  fortunes."  :; 

Reduced  to  simple  language  tin's  is  authoritative  con- 
firmation of  the  truism  that  none  but  the  mighty  rich 
have  the  means  to  engage  in  a  great  campaign  of  theft. 
Yet  to  focus  attention  upon  the  frauds  of  these  particular 
capitalists,  without  inquiring  into  the  good  work  which 
at  bottom  they  were  doing,  would  be  grievously  one- 
sided and  misleading.  Notwithstanding  their  prodigious 
frauds,  Vanderbilt  and  Gould  and  all  the  other  masterful 
capitalists  were,  without  being  conscious  of  it,  perform- 
ing a  great  evolutionary  service  of  the  highest  impor- 
tance. It  was  they  who  were  among  the  leaders  in  con- 
solidating and  centralizing  transportation  and  industrial 
utilities  ;  in  effacing  the  old  wasteful  competition  and  the 
warfare  of  the  little  capitalists ;  and  in  establishing  an 
era  of  systematic,  concentrated  private  control.  It  was 
done  despite  statutory  law-  and  judicial  decisions,  in  spite 
of  every  obstacle,  for  it  had  to  be  done ;  it  was  an 
inevitable  stage  of  progress  preceding  further  stages.  In 
doing  it,  however,  the  great  barons  were  prompted  by 
selfish  greed  only  ;  they  fixed  their  own  price,  a  colossal 
price,  taxing  the  producer  to  pay  whatever  toll  they  de- 
manded. * 


THE     PLUNDERING     OF     RAILROAD     SYSTEMS. 


66 

sold  to  themselves  as  directors  of  the  Union  Pacific, 
was  the  Kansas  Pacific.  This  line,  about  three  hundred 
and  ninety- four  miles  in  length,  was  another  of  the  many 
railroads  the  history  of  which  was  replete  with  unbroken 
corruption.  Its  chief  assets  were  an  issue  of  Govern- 
ment bonds,  and  a  land  grant  of  three  million  acres  in 
Kansas  and  Colorado. 

From  the  very  granting  of  the  charter  the  corruption 
was  so  well  established  that  none  but  the  densely  obtuse 
could  be  ignorant  of  it.  But  what  mattered  the  means 
used  ?  The  greater  the  corruption,  the  more  certainty 
was  there  that  the  ensuing  privileges,  powers  and  profits 
would  be  all  the  richer.  And  the  more  attractive  the 
prospects,  the  more  eager  in  their  cupidity  were  the 
luminaries  of  the  financial  world  to  thrust  in  a  hand. 
Eminent  bankers  sharply  competed  to  participate  in  the 
financing  of  the  project ;  the  floating  of  the  Kansas  Pa- 
cific loan  was  finally  awarded  to  two  banking  firm-. 
One  of  these  was  Dabney.  Morgan  and  Co.,  of  which 
J.  Pierpont  Morgan  was  a  member,  and  the  other  the 
house  of  Morris  K.  Jesup  and  Co..  the  head  of  which  sub- 
sequently managed  to  become  enrolled  among  the  gal- 
axy of  glorified  philanthropists. r>  In  their  advertisements 
in  ]86(>  the-e  bankers  glowingly  descanted  upon  the 
splendid  land  grant  of  the  Kansas  Pacific  —  a  grant, 
which  thev  assured  all  intending  investors,  -would  be  more 
than  sufficient  ->ecuritv  for  loans. 


P>ut    the    usual    culmination    came.     The    Kansas    and 
'acific  project   was   no   exception   to   ihe   invariable   ex- 


TI1K    liOL'LU    KOU  i  (    X  I.    Kl 

pericnce  in  railroad  affair-.  It  was  assiduously  plun- 
dered by  the  men  on  top  of  the  heap,  and  the  following 
of  petty  investors  were  neatly  cheated  out.  Obviously. 
stripped  as  it  was,  the  market  value  of  its  stock  sunk  to 
an  insignificant  point.  Gould  had  been  waiting  for  pre- 
cisely this  opportunity,  but  he  did  not  avail  himself 
of  it  before  he  had  put  through  a  sort  of  blackmailing 
scheme  bv  which  he  could  all  the  more  effectually  force 
the  Kansas  Pacific  into  his  ownership. 

With  a  loquacity  that  ought  to  have  aroused  keen 
suspicion,  he  proclaimed  his  purpose  to  break  down  the 
monopoly  held  by  the  Kansas  Pacific;  once  more  he 
posed  as  a  middle-class  benefactor.  Thereupon  he  be- 
gan, or,  rather,  ordered,  the  building  of  a  railroad  in 
Colorado  which  trenched  competitively  upon  part  of  the 
very  territory  the  Kansas  Pacific  owners  regarded  as 
their  own  assured  domain.  Gould's  scheme  worked  to 
perfection;  Kansas  Pacific  stock  was  forced  lower  still, 
and  its  affrighted  owners  were  speedily  compelled  to 
come  to  terms.  Xo  sooner  had  Gould  obtained  posses- 
sion of  the  Kansas  Pacific,  and  consolidated  it  with  the 
Union  Pacific,  than  he  at  once  abandoned  the. Colorado 
Railroad.8 

Just  how  much  of  Kansas  Pacific  "Railroad  stock 
Gould,  Sage  and  Dillon  respectively  secured  is  not  clear, 
but  the  amount  of  booty  that  they  collective! v  took  in  by 
the  fraudulent  process  of  selling  this  railroad  and  oilier 
railroads  to  themselves  as  masters  of  the  Union  Pacific,  i- 
quite  clear.  Xo  mean  operation  was  it  --  something  mas- 
sive was  there  about  it  —  such  as  might  evoke  a  wonder- 
ing admiration  on  the  part  of  a  society  wherein  great 
thefts  were  placed  in  an  exalted  category. 

In  tlie  Higgling  exchange  of  stacks  ami  bonds  and  the 


C>8         HISTORY    OF    Till-:    GRKAT    AMIiRU'AX    FORTUNES 

fraudulent  diversion  of  funds,  they  stole  (the  Govern- 
ment termed  it  "misappropriated")  more  than  $20,000,- 
ooo  in  the  Kansas  Pacific,  the  Denver,  South  Park  and 
Pacific,  and  other  consolidations  alone.  From  the  vol- 
umes of  the  Pacific  Railway  Commission's  report  and 
investigation,  certain  definite  facts  are  ascertainahle. 
Both  the  majority  report,  that  of  Commissioners  Littler 
and  Anderson,  and  the  minority  report  of  Commissioner 
Pattison,  set  forth  that  the  frauds  of  the  Union  Pacific 
Railroad  Company,  under  the  direction  of  Gould,  Sage 
and  Dillon,  were  truly  gigantic. 

Millions  of  acres  of  puhlic  land  were  stolen  outright. 
Not  less  than  seven  million  acres  were  sold  without  any 
patent  from  the  Government.7  Coal  lands  of  inestima- 
ble value  were  fraudulently  seized.8  Millions  of  dollars 
were  fraudulently  shuf.\'d  from  one  corporation  to  an- 
other. The  stock  of  the  Union  Pacific  was  inflated  from 
838,000,000  to  $50,000.000,  the  bonded  indebtedness  from 
$88,000,000  to  $[26,000.000,  and  sundry  other  in- 
debtedness from  about  $4,000.000  to  nearly  $10.000.000. 
The  majority  report  referred  ''  to  the  lavish  and  reckless 
distribution  of  the  assets  of  the  company  in  dividends  " 
and  expressed  sharp  curiosity  as  to  why  the  Union  Pa- 
cific Railroad  Company,  although  doing  a  large  and 
profitable  business,  "  found  itself  early  in  1884  on  the 
verge  of  bankruptcy." 

While  these  huge  stealings  were  going  on.  and  after 
a  (  lovernment  action  for  "  misappropriation  of  assets  " 
had  been  begun,  Gould  and  his  accomplices  took  steps  to 
grant  themselves  immunity  from  legal  consequences. 
'  It  appears,"  says  the  majority  report.  ''  that,  while  this 
litigation  was  pending,  certain  proceedings  were  taken 


THI-:  r.ori.D  FOKTI  XK  KKSI  .MI:D  b'-j 

by  the  directors  whereby  by  their  own  acts  and  votes 
they  undertook  to  release  themselves  from  any  obliga- 
tions or  liabilities  to  the  company." 

FORTY    MILLION   DOLLARS  GOL'LI)'s  SHARK. 

The  minority  report  was  even  severer  and  more 
searching".  It  set  forth  that  the  Union  Pacific  and  the 
Kansas  Pacific  had  received  about  835,000,000  in  ad- 
vances from  the  Government,  little  of  which  had  been 
paid  back,  and  that  up  to  1887  the  sum  of  $136.314.- 
010.73  ''had  been  dissipated"  by  the  directors  of  tlK.-e 
two  railroads/'  Fully  $84.000.000  of  watered  stock  had 
been  issued.  "  The  Union  Pacific  Company."  the  mi- 
nority report  went  on.  "  has  received  $176.294.793.53 
in  surplus  earnings  and  land  sales  during  eighteen  years, 
and  if  its  stock  had  been  fully  paid,  as  Congress  required 
that  it  should  be.  and  as  its  officers  certified  under  oath 
that  it  was,  nearly  all  of  that  money  would  be  applicable 
to-day  to  the  payment  of  the  Government  debt.  The 
company  has  paid  out  $28.650.770  in  dividends,  and  $82.- 
742,850  in  interest  on  bonds,  nearly  all  of  which  wa- 
distributed  to  shareholders  without  consideration.  !' 
ha>  sunk  over  810,000,000  in  Denver.  South  Park  an -: 
Pacific;  it  paid  out  810.000,000  to  Jay  Gould  and  his 
associates  for  branch  lines  and  other  investments  which 
were  worthless."  .  .  .  Commissioner  Pattison  esti- 
mated that  lav  Gould's  personal  profit  from  hi>  manipu- 
lation of  the  I'nion  Pacific  amounted  to  probably  840.- 

(K)O.OOO.10 

A  large  part  of  the  sum  that  Pattison  included  in  his 
estimate  of  the  total  theft  from  the  origin  of  the  Union 


7O         HISTORY    OL'    TliK    GREAT    AMERICAN'    FORTUNES 

J  'acific  Railroad  was,  as  \ve  have  seen,  stolen  by  Gould's 
predecessors  in  the  Credit  Mobilier  swindle. 

Inasmuch  as  technical  financial  terms  often  present 
mystifying  difficulties  to  the  unaccustomed,  a  definition 
of  stocks  and  bonds  may  not  here  be  out  of  place;  the 
more  appropriately  so  since  it  will  explain  how  the 
manipulators  of  railroad  and  other  property  constituted 
themselves  both  shareholders  and  creditors. 

If  they  desired  a  railroad  to  be  on  a  paying  basis,  they, 
as  stockholders,  took  its  dividends ;  if  it  suited  their 
ulterior  purposes  to  bankrupt  it,  they,  as  bondholders, 
could  foreclose  and  buy  it  back  at  a  bargain  price.  In 
the  phrase  of  the  street,  they  could  ''  play  both  ends 
against  the  middle."  Bonds  and  stocks,  although  both 
classed  as  capital,  differ  in  certain  salient  respects. 
[kinds  are  certificates  of  indebtedness  theoretically  issued 
to  those  who  have  made  loans  to  a  corporation,  and  can 
be  effaced  upon  payment  of  the  principal.  Stocks,  on 
the  other  hand,  are  certificates  of  ownership  theoretical!} 
issued  to  investors  :  by  their  nature  they  are  in  law  per- 
petual. In  brief,  then,  the  stockholders  are  the  owner- 
of  a  corporation  ;  the  bondholders  its  creditors. 


The  query  can  here  naturallv  be  expected  :  \Yliy  was 
Gould  not  prosecuted  for  his  male-factions?  How  wa> 
it  possible  for  him  to  have  carried  through  his  immense 
thefts  without  some  visitation  of  criminal  proceedings? 
So  long  as  he  robbed  the  people,  the  great  plodding,  pow- 
erles-  multitude,  without  any  real  representation  in  po- 
litical office,  it  could  be  understood  that  his  license  would 


plundered  his  own  class  as  well  ;  outraged,  betrayed  and 
pillaged  his  own  associates ;  they  were  men  of  power ; 
why  did  not  they  invoke  the  terrors  of  criminal  law  J. 

\Vell,  some  of  them  did.  15ut  it  profited  them  no  more' 
than  it  did  his  opponents  in  his  famous  Erie  steal-. 
Threatened  with  jail  several  times,  Could  easily  con- 
trived to  keep  out  of  it.  as  did  his  similars  in  every  great 
capitalist  fraud.  An  indictment  found  against  him  on 
May  13,  1879.  by  the  (irand  ]ury  of  Monmouth  County. 
Xe\v  Jersey,  for  alleged  fraudulent  transactions,  did  not 
trouble  him  in  the  least.  The  charge  in  this  case  was 
made  by  the  Lehigh  Car  Manufacturing  Company  that  it 
had  supplied  cars  to  him  on  false  representations;  that 
it  had  agreed  to  accept  as  payment  first-mortgage  bonds 
of  the  Xew  Jersey  Central  Railroad,  only  to  discover, 
when  too  late,  that  these  bonds  were  spurious  "  consolida- 
tion bonds  "  representing  a  consolidation  that  was  never 
made. 

Out  of  this  indictment  Could  somehow  wriggled,  and 
nine  years  later  lie  was  as  successful  in  snuffing  out  an- 
other case  of  criminal  proceedings. 

This  was  in  1888;  powerful  adversaries  sought  hard 
to  put  him  in  prison;  and  it  was  the  knowledge  of  their 
power  and  persistence  that  thoroughly  alarmed  Could. 

Certain  of  these  opponents  were  disgruntled  bond- 
holders of  tin-  I  )enver  1'acilic  Railroad,  and  thev  were 
assisted  bv  the  owner  of  an  important  Xew  York  news- 
paper whose  interests  Could  had  crossed  and  thwarted 
in  the  telegraph  and  submarine  cable  field.  The  charge 
revolved  around  a  tricky  piece  of  periurv  by  which 
Could,  Sage  and  Dillon,  in  their  railroad  consolidations, 
had  embexxled  several  million  dollars  in  the  juggling  of 
thirty  thousand  share-  of  Denver  Pacific  stock.  These 
bondholders  had  begun  an  action  a:':rin-4  Could  and 


Sage  in  Xe\v  York,  in  1885.  for  restitution;  the  news- 
paper  owner  dr.ily  emitted  savage  maledictory  broadsides 
;;gcun>t  Gould,  a:~.d  demanded  his  punishment.  And  to 
cap  it  all,  the  foreman  of  the  Grand  Jury  sitting  was  a 
fellow  capitalist,  whom  Gould  had  cheated  fifteen  years 
before  in  one  of  his  railroad  transactions. 

it  was  a  formidable  combination  arrayed  against  him. 
Gould  knew  it.  He  realized  at  once  that  he  had  better 
settle  with  the  complaining  bondholders  and  light  out 
and  with  dispatch ;  he  thereupon  came  to  terms  with 
them,  and  then  fled  on  his  yacht  and  remained  in  for- 
eign parts  until  the  statute  of  limitations  could  be 
pleaded  with  success  in  his  behalf,  so  far  as  criminal  pro- 
ceedings were  concerned. 

A    WIDI-;   TRAIL    OF    CORK  f  I'TION7. 

Still  another  question,  although  an  idle  one,  may  arise: 
liow  was  Gould  able  to  get  ihe  laws  necessary  for  his 
numerous  frauds,  and  immunity  from  legislative  and. 
other  official  action?  The  'Pacific  Railway  Commission- 
ers' report  docs  not  answer  this  question  elucidatively. 
'I  he  minority  report,  however,  sheds  a  few  more  rays 
upon  lii.-  methods.  "  Hundred.-  of  thousands  of  dollars,'' 
it  says,  "  have  been  disbur.-ed  at  the  State  and  Xational 
capitals  for  the  purpose  of  influencing  legislation."  n 
Frequent  references  are  made  to  "  pavments  for  im- 
proper purposes."  I  lowever,  even  if  the  commission  had 
not  explained  in  its  meager,  grudging  wav  the  corrup- 
tion following  Gould  everywhere,  it  could  be  taken  for 
granted;  hi-  trail  of  bribery  and  fraud  had  been  a  public 
stench  for  full  .  •  !\  year-,  i:i  which  respect  lie  differed 
much  from  ••'<•  ;  contemporary  wealth-seekers,  for 


Til!-;    C.OU.IJ    L-'OKTUMi    RESUMED  73 

whereas  lie  acquired  both  name  and  game  they,  too,  had 
the  game,  yet  so  cunningly  was  it  bagged  that  they  were 
able  to  slip  into  the  cover  of  good  repute.  Also,  let  this 
fact  not  be  overlooked;  that  the  widespread  bribery  was 
but  a  form  of  procuring  license  to  prey  at  pleasure.  To 
get  laws  sanctioning  theft,  and  official  connivance  at  th  • 
retention  of  the  proceeds,  it  was  necessary  to  divide 
among  the  politicians  (including  some  of  those  on  the 
bench)  a  certain  portion  of  the  spoils. 

By  about  the  year  1883  Gould  discarded  the  Union 
Pacific  after  having,  as  he  believed,  looted  the  marrow 
out  of  it.  Doubtless  his  conclusion  was  aright,  seeing 
that  no  further  immediate  booty  was  in  sight  in  that 
particular  line  and  at  that  day.  But  in  the  fullness  of 
time,  namel}'.  fifteen  years  later,  when  the  country's 
population  and  resources  h?d  greatly  expanded,  a  worthy 
successor,  in  the  person  of  Harriman,  came  irresistibly 
along  to  imitate  and  elaborate  Gould's  methods.  Xot  to 
the  purpose  is  it  here  to  anticipate  the  narrative  of  Har- 
riman's  career;  this  will  be  faithfully  found  in  its  proper 
place;  but  one  more  addendum  is  needed  to  give  a  kind 
of  finishing  touch  to  the  tale  of  the  Kansas  Pacific  Rail- 
road, if  only  to  show  that  others  knew  how  to  begin 
where  Gould  left  off. 

The  $40,000,000  or  thereabouts  in  loot  which  Gould 
appropriated  came  in  considerable  part  from  the  Kan- 
sas Pacific  transaction.  The  final  swindling  of  the  ( lov- 
ernment  out  of  much  of  the  advances  that  it  had  given 
for  this  road,  occurred  in  iS<;S  —  at  the  precise  time 
when  I  larriman  was  bursting  brilliantly  into  wealth  and 
power. 

riie  Government  held  a  remaining  claim  against  the 
Kansa<  Pacific  for  $13.000,000.  A  fraudulent  plan  had 
been  concocted  to  have  the  Government  sell  its  lien  at 


74         lii.STURY    OF    THE    GREAT    AMERICAN    FORTUNES 

one-half  of  the  amount  due;  a  most  deftly  preconceived 
plan  it  was,  and  only  on  the  eve  of  its  consummation  was 
there  an\-  noise  raised.  Turpie  offered  a  motion  in  the 
l.'nited  Slates  Senate  that  the  sale  he  not  confirmed;  sup- 
porting that  motion,  Senator  Allen  rose  on  February  16. 
1898,  and  remarked  that  "we  might  as  well  enact  a  statute 
taking  $6,700,000  out  of  the  Treasury  and  make  an  abso- 
lute donation  of  it.  It  would  be  no  more  criminal,  no 
more  in  violation  of  the  statutory  rights  of  the  people."  u> 
Senator  Morgan,  of  Alabama,  denounced  the  sale  as  rob- 
bery, Harris  called  it  a  swindle,  and  its  promoters  thieves. 
Robust  language,  but  it  did  not  interfere  with  the  hasty 
sale  for  $6,000,000  of  the  Government's  lien  on  that  very 
same  day. 


VAST   AREAS   OF    COAL    FIELDS    STOLEN'. 

To  form  any  adequate  conception  of  Gould'-  thefts 
in  his  manipulation  and  management  of  the  I'nion  Pa- 
cific consolidation,  a  mere  money  computation  falls  flat. 
The  resources  expropriated  by  Gould  and  by  his  de- 
scendants cannot  be  expressed  in  money  terms.  For  ex- 
ample, the  enormous  coal  deposits  expropriated  from  the 
people — -who  can  say  what  their  exact  money  value  is? 
The  Interstate  Commerce  Commission  announce.-  that 


\\ 


vstem,  principally  by  the  Denver  and  Rio  Grande 
ilroad,  which  was  one  of  a  number  of  Western  rail- 
id  li;ies  that  Gould  held  onto  and  bequeathed  to  hi- 


My- fifth     Congress,     Second 


75 

obtained?  Here  we  do  not  have  to  encounter  any  in- 
tricacies of  stock  and  bond  finance ;  they  were  simply 
seized  with  just  enough  formalities  to  give  some  color 
of  complying  with  the  law.  Behind  these  thin  formali- 
ties lay  a  long'  path  of  "  fraud,  perjury  and  violence," 
says  the  Interstate  Commerce  Commission's  report  of 
1908.  In  commonplace  official  diction  the  story  of  the 
seizure  of  these  deposits  is  there  told ;  how  for  forty 
years  or  more  the -Gould  and  other  railroad  corpora- 
tions have  employed  dummy  "  occupiers  "-  —  mainly 
women — -to  file  fictitious  entries  on  public  coal  lands, 
and  then  have  had  the  claims  transferred.  An  inexpen- 
sive method  it  has  been,  ridiculously  easy  to  get  much 
for  little ;  the  dummy  "  occupiers  "  were  paid  $50  or 
$100  each  to  do  their  fraudulent  work.  And  if  a  coal  or 
an  oil  deposit  could  not  be  obtained  by  fraud,  then  —  if 
the  numerous  testimony  taken  by  the  Interstate  Com- 
merce Commission  is  correct  —  force  was  used  to  oust 
such  individual  occupants  as  had  lawfully  acquired  the 
land.13 

13  One  of  the  capitalists  connected  with  Gould  and  Sage  was 
David  H.  Moffutt,  Jr.  Mofi'atl  was  an  official  of  the  Denver 
Pacific  Railway  and  Telegraph  Company,  and  \\a>  associated 
with  Gould  and  Sage  in  the  Union  Pacific  Railroad.  He  lie- 
came  one  of  the  foremost  millionaires  in  Colorado.  Some  of  his 
methods  were  revealed  in  a  ca>e  he  lore  the  Supreme  Court  of 
the  United  Stales.  The  Government  had  hrouuht  suit  to  cause 
tin-  cancellation  of  two  patents  of  land  in  Colorado,  granted 
ahout  ten  years  hefore,  in  i-y73.  This  land  was  partly  a  val- 
nahle  mineral  tract,  containing  large  deposits  of  coal  and  iron. 
The  Government  von  its  case  in  the  lower  courts,  and  Mofi'af 
appeah  d.  In  it-  decision  the  Supreme  Court  held  that  Govern- 
ment land  officials  had  conspired  to  defraud  the  Government  ; 
that  patents  of  land  were  made  ont  in  fictitious  names  of  al- 
leged settlers;  that  the  affidavits  were  forged,  and  that  Moffan 
was  the  real  her.eficiary  and  "knew  oi  the  false  and  fraudulem 
character  of  alleged  preemptions."  (United  States  Reports.  Vol. 
cxii  :  _'.}-3_>.  )  In  this  particular  case,  Moffait  was  defeat. -d.  Inn 
.1  is  \ery  likely  thai  lie  was  succes>tul  m  Mimlar  instances  of  ac- 
quiring mineral  lands. 


76         HISTORY    Ol?    THE    GREAT    AMERICAN    FORTUNES 

Continuously,  since  1866,  these  thefts  of  coal  and  oil 
lands  have  gone  on  with  but  occasional  stoppages  due 
to  official  investigations.  These  in  nowise  served  to  pre- 
vent a  fiercer  resumption.  The  Interstate  Commerce 
Commission  recently  reported  that  the  Gould  and  Har- 
riman  lines  in  a  large  region  beyond  the  Mississippi  "  ab- 
solutely dominate  the  mining,  transportation  and  selling 
of  coal  along  their  lines."  Uncounted  paragraphs  and 
strings  of  affidavits,  all  embodied  in  the  official  volumes, 
sustain  the  charges  of  fraud,  perjury  and  violence.  Yet 
the  beneficiaries  of  those  colossal  frauds  have  good  rea- 
son to  smile  amusedly  at  all  such  futile  investigations ;  the 
ownership  of  most  of  the  stolen  property,  however  pro- 
cured, is  theirs  ;  some  the  Government  succeeded  in  get- 
ting back,  but  proportionately  little.  On  the  whole,  the 
beneficiaries  are  well  satisfied. 

Let  it  not  be  supposed  that  Gould's  mind  was  so  pre- 
occupied with  his  Union  Pacific  piracies  that  he  was 
oblivious  to  opportunities  elsewhere.  Far  from  it.  This 
undersized  man,  with  his  mild  voice  and  inconspicuous, 
almost  effeminate,  personality,  was,  indeed,  an  irrepressi- 
ble conquerer,  seizing  and  pillaging  not  merely  wherever 
he  went,  but  in  many  places  and  in  different  fields  simul- 
taneously. In  his  own  chosen  method  of  warfare,  his 
mind  was  an  extraordinarily  versatile  one.  wonderfully 
gifted  at  computation,  with  the  virile  ability  to  keep  track 
of  a  vast  variety  of  involved  transactions  at  the  same 
time.  \Yith  the  law  end  of  them  he  did  not  have  to 
concern  himself;  at  call  he  could  always  hire  a  corps  of 
the  most  dexterous  attorneys,  none  of  whom  scrupled  to 
take  as  payment  a  fraction  of  his  thefts.  Lawyers,  some 
of  whom  became  judges  in  the  highest  courts  in  the 
Country,  and  other  lawyers  who  had  been  iudgcs  and  had 


THI-:    GOULD    FOKTUXi:    UKSU  M  Kl>  77 

resigned  to  draw  large  retainers  from  the  very  corpora 
tions   in   whose   favor  they  had  handed  down   decision.  . 
pleaded  and  plotted   for  Gould.     An  excellent  client  he 
was  :  the  litigations  in  which  he  was  involved  were  ex- 
tensive. 

GOULD'S  TEXAS  PACIFIC  UNDERTAKING. 

Wherever  he  appeared,  the  lesser  frauds  were  over- 
whelmed and  flung  out  and  he,  the  great  fraud,  substi- 
tuted himself  in  their  places.  This  he  again  demon- 
strated in  his  appropriation  and  looting  of  the  Texas 
Pacific  Railroad.  This  line  had  received  the  usual  Gov- 
ernment subsidies  and  land-grant  gratuities.  The  cor- 
ruption used  in  the  procuring  of  these  was  fully  revealed 
in  the  celebrated  "  Huntington  letters,"  which  came  to 
light  later  in  a  suit  arising  between  two  railroad  fac- 
tions. The  writer  of  these  letters  was  a  man  who  knew  ; 
a  preeminent  corrupter  himself;  he  was  none  other  than 
Collis  P.  Huntington,  one  of  the  dictating  railroad  mag- 
nates of  the  period.  In  1876,  1877  anc^  ^78,  the  years 
covered  by  his  letters,  a  furious  competition  in  corruption 
was  in  progress  at  Washington,  and  Huntington  wrote 
unreservedly  of  it.14 

After  Congress  passed  the  Texas  Pacific  Railroad  Act, 
Gould  turned  up  with  a  scheme  closely  resembling  the 
Credit  Mobilier  swindle.  Forming  a  construction  com- 
pany he  entered  into  a  contract  with  the  Texas  Pacific 

'•'In  a  letter  dated  December  17,  1877,  Huntington  wrote: 
"Jay  Gould  \vem  lo  Washington  about  two  week's  since,  ami 
I  know  saw  Mitchell,  Senator  from  Oregon.  Smce  which  time 
money  has  been  used  very  freely  in  Washington.  .  .  .  Gould 
b.as  large  amounts  ir,  cash  and  he  pays  it  without  stint  to  earn- 
In^  points."  In  a  letter  dated  May  3,  1878.  Huntington  wrote 
that  the  Texas  and  Pacific  "  i<-lk>  offered  one  member  of  Con- 
gress $i,<x)o  cash  down,  $5.000  when  the  bill  passed  and  $10.000 
oi  the  bonds"  if  be  would  vote  for  the  bill,  etc.,  etc. 


Railroad  Company  to  build  the  westward  extension,  em- 
bracing about  six  hundred  miles.  For  this  work  $12,- 
ooo.ooo  in  bonds  was  to  be  paid,  and  a  stock  bonus  of 
another  $12,000,000.  A  very  remarkable  contract  it  was, 
tantamount  to  giving  Gould  a  present  of  the  system  ;  its 
execution  could  be  explained  only  upon  the  premise  that 
Gould  had  bought  up  a  sufficient  number  of  the  railroad 
directors,  with  an  assurance  that  they  would  get  a  gen- 
erous clip  into  the  plunder.  For  by  the  terms  of  the 
contract,  the  stockholders  of  the  Texas  Pacific  owned  a 
one-sixth  interest  only  in  the  construction  company; 
this  left  the  Gould  syndicate  with  810,000.000  in  stock. 
which  easily  sufficed  to  give  it  the  mastery  of  the  road. 
It  placed  him  in  a  position  where  he  could  elect  its  di- 
rectors, make  further  contracts  with  himself  on  any  basis 
he  chose,  manipulate  its  affairs,  and.  in  general,  make 
them  dovetail  with  his  manv  other  schemes. 


MORE    RAH. ROAD    SYSTEMS   GATHERED    IX. 

The  Texas  Pacific  was  one  of  the  lour  main  lines  that 
Gould  and  Sage  obtained  control  of  by  their  well-known 
methods.  These  it  is  scarcely  necessary  to  recapitulate. 
Another  of  their  lines  was  the  \Yabash,  composed  of 
sixty-eight  originally  separate  little  railroads  in  Ohio. 
Michigan,  Indiana,  Illinois.  Missouri  and  Iowa.  Within 
five  years  of  the  time  they  gained  hold  of  the  Wabash. 
<  lould  and  Sage  had  obtained  a  great  series  of  privileges 
from  various  States,  looted  the  railroad  of  millions  of 
dollars,  and  then  had  thrown  it  into  bankruptcy.1''  So 
nauseatingly  fraudulent  were  their  method-,  that  fudge 
Gre-ham.  of  the  United  States  Circuit  Court — one  of 


i.  7'J 

the  few  judges  of  independent  character-  removed  re- 
ceivers whom  Gould  and  Sage  had  caused  to  be  ap- 
pointed, and  accompanied  this  act  with  a  caustic  de- 
nunciation ;  all  of  which  had  no  effect  upon  Gould's  own- 
ership ;  he  retained  its  control  and  it  descended  to  his 
family. 

Each  new  haul  gave  Gould  and  Sage  a  still  greater 
supply  of  resources  with  which  to  manipulate  other  rail- 
roads and  other  public  utility  systems  into  their  control. 
The  Missouri  Pacific,  with  its  chain  of  railroads  for  the 
building  of  which  the  State  of  Missouri  had  advanced 
$25,000,000,  was  next  added  to  the  list.  It  suited  the 
plan  of  Gould  and  Sage  not  to  drive  this  railroad  into 
bankruptcy  as  they  had  the  others.  In  this  instance 
they  had  a  special  design.  By  fraudulently  diverting 
freight  traffic  at  the  expense  of  their  other  railroads,  they 
so  increased  its  "  earnings  "  that  its  stock  commanded 
a  high  value  ;  the  selling  of  the  stock  at  the  apex  price 
yielded  them  large  sums.  Then  they  would  depreciate 
the  value  of  the  stock  and  buy  it  back.  The  Missouri 
Pacific  is  to-day  one  of  the  most  prized  possessions  of 
the  Gould  family:  its  control  is  so  compactly  a  matter  of 
callow  family  inheritance  that  only  recently,  in  1909, 
Kingdon  Gould,  a  grandson  of  Jay  Gould,  was  installed 
as  a  director. 

All  of  these  various  svstems  were  annexed  bv  Gould 
in  approximately  the  same  years  that  he  was  plundering 
the  I  nion  Pacific.  Shall  we  enter  into  a  recital  of  the 
network  of  details  by  which  the  final  result  was  ac- 
complished? The  maneuvering,  the  coercion  here,  the 
bribery  there,  the  undermining  of  this  faction  of  capital- 
ists, and  the  overthrow  of  that,  the  legal  devices  and 
long-drawn  law  suits- — all  these  form  a  complex  nar- 
rative which,  if  copiously  described,  would  be  confusing 


SO          HISTORY    Op    Till'.    C,RKAT    AMERICAN     FORTUNES 

and  wearisome.  But  the  haltering'  methods  Gould  used 
in  getting  hold  of  other  properties  are  worth  an  outline, 
-•ho\ving  as  they  do,  the  manner  in  which  the  railroad 
and  industrial  kings  fought  out  their  wars. 


VAXDERBILT    BLACKMAILED    AND    OUTGENERALED. 

In  looking  about  for  new  properties  to  add  to  their 
possessions,  Gould  and  Sage,  when  sacking  the  Union 
Pacific  Railroad,  decided  that  the  Western  Union  Tele- 
graph system  should  be  theirs.  Any  other  set  of  capital- 
ists would  have  hesitated  long  before  venturing  such  ;.. 
plan,  for  that  company,  the  strongest  of  all  the  telegraph 
companies,  was  controlled  by  William  H.  Yanderbilt.  the 
richest  capitalist  in  the  United  States.  Gould  and  Sage 
were  not  at  all  deterred  by  the  prospect ;  they  had  a  plan 
by  which  they  could  force  out  Yanderbilt ;  it  was  none 
other  than  the  species  of  blackmailing  scheme  which 
they  had  u-ed  to  coerce  the  Kansas  Pacific  directors,  a 
scheme  which  Yanderbilt  himself  had  employed,  arid 
which  competing  capitalists  had  used  against  him. 

This  oft-used  scheme  of  the  day  was  the  very  simple 
one  of  building  a  competitive  telegraph  line.  Again 
Gould  came  forward  with  the  posture  of  being  an  "an- 
tagonist of  monopolies'';  sweetly  did  he  discourse  on 
the  necessity  of  complete  competition.  It  was  at  this 
time  that  Senator  Yest  minted  his  trenchant  comment 
upon  the  professions  of  the  money  seekers.  "  When  they 
speak  they  lie  :  when  thev  are  silent  they  are  stealing.''' 
an  epigram  deserving  of  perpetuation. 

.Along  the  line  of  the  Union  Pacific  Railroad  and 
of  their  other  railroads.  Gould  and  Sage  ordered  the 
construction  of  a  telegraph  line,  with  the  fixed  purpose 
of  compelling  Yanderbilt  either  to  buy  or  to  >ell.  So 


8 1 

seriously  was.  the  business  of  the  Western  Union  Tele- 
graph Company  cut  in  npon,  that,  in  self-protection,  it 
was  finally  forced  to  buy  Gould's  competing  line  for 
about,  it  \vas  understood,  $10,000,000.  Having  pock- 
eted this  large  sum  wrenched  from  Vanderbilt  and  his 
associates,  Gould  tlien  ])lungecl  in  and  took  away  their 
entire  telegraph,  system.  I'.y  every  trick  and  art  of 
Stock  Exchange  speculative  methods,  Gould  forced 
down  the  price  of  V\"estern  Union  stock,  and  gradually 
bought  in  quantities.  To  Vanderbilt's  complete  surprise 
and  extreme  mortification,  Gould  turned  up  in  iSSi  not 
only  with  a  control  of  the  We:  tern  Union,  but  also  of 
the  American  Union  Telegraph  Company  which  he  had 
sold  to  Yanderbilt  but  a  short  time  previously. 


Upon  obtaining  control  of  the  Western  Union  Tele- 
graph Company,  Gould  immediately  increased  its  stock 
and  kept  on  increasing  it.  Triumphant,  gorged  with 
spoils  and  power.  Gould  did  not  have  to  court  the  sup- 
port of  all  that  was  considered  solid  and  respectable 
among  the  money  aristocracy.  '!  hey  knew  him  to  be  a 
great  thief,  and  he  knew  their  caliber,  despite  the  ex- 
terior that  they  had  woven  about  themselves.  The  in- 
stinct of  kind  for  kind  is  unerring;  which  instinct  in  a 
money  world  is  reinforced  by  that  invariable  principle 
of  action  whereby  wealth-seekers  rally  around  him  who 
proves,  his  supreme  abilitv  to  get  away  with  the  plunder. 
The  vanquished  are  expeditiously  deserted;  the  success- 
ful (locked  about.  Such  fellow  kings  of  wealth  as  John 
Jacob  Astor,  J.  I'ierp-.nt  Morgan.  Collis  1\  Iluntington 
and  others  were  among  the  noble  array  to  be  found  in 
Gould's  board  of  directors;  a  notable  lot  manv.  or  all. 


82 

ui  whom  had  pur-ued  career.-  more  or  less  paralleling 
Gould's  ;  a  sophisticated  confraternity  they  comprised, 
fully  and  finely  capable  of  understanding  one  another. 

All  were  wary  old  stagers ;  Gould  could  not  easily 
overreach  them ;  while  all  of  them  were  not  quite  as 
astute  as  Sage,  most  were  widely  schooled  in  every 
devious  tactic  and  ruse  of  financial  and  industrial  war- 
fare. Their  safety  lay  in  their  lack  of  trust :  the  very 
reverse  of  the  virtues  they  preached  was  developed  by 
the  necessities  of  their  conflict.  But  when  a  credulou- 
man,  such  as  Cyrus  \V.  Held,  the  originator  of  the  sub- 
marine cable,  stepped  along  with  his  confiding'  faith  in 
Gould's  friendship,  spoliation  and  ruin  were  easv  ac- 
complishments. Field  was  simple  enough  to  believe  in 
Gould ;  only  after  Gould  had  mercilessly  squeezed  his 
wealth  out  of  him,  and  had  turned  him  adrift  a  bank- 
rupt, did  Field,  too  late,  begin  to  realize  that  friendship 
had  no  place  in  the  competitive  whirligig.  Field  had 
little  reason  to  whine  over  his  misfortunes:  the  wealth 
that  Gould  tore  from  him  \va-  the  product  of  a  series  of 
fraud-  in  the  results  of  which  lie  was  very  willing  to 
share. 

GOULD    SWFFT'S    [\    FLFVATF.n    RAILROADS. 

This  fleecing  of  Field  happened  in  Gould's  thimble- 
rigging  of  elevated  railroad  stocks  in  Xew  York  city. 
Xo  part  whatever  had  Gould  in  the  building  of  this  ele- 
vated system:  the  franchises  by  which  the  roads  were 
constructed  and  operated  had  been  obtained  bv  bribery. 
Afu-r  other  capitali-t-  had  done  the  bribing  and  had 
<diown  how  profitable  these  elevated  railroad-  were. 
Gould  and  Sage  reached  out  for  their  ownership. 

It    was     fairlv    well    e-tabli-hed    before    the    Hepburn 


Legislative  committee,  in   1^7'j.  that  about  $650,000  had 

been  expended  in  bribes  to  get  the  ehurter  of  one  of 
these  elevated  railroad  companies,  the  ( iilbert,  later 
called  the  Metropolitan.  Under  examination,  Jose  F. 
Xavarro.  one  of  the  officials  of  the  company,  testified 
that  up  to  the  time  the  building  of  this  railroad  \va> 
started,  $650,000  had  been  spent.  Questioned-  as  to 
whether  it  had  been  expended  at  New  York  or  at 
Albany  (the  seat  of  the  Legislature)  he  replied  that 
he  did  not  know.  It  was  quite  clear  from  the  inter- 
rogatories and  answers  that  this  $650,000  had  been  used 
as  a  corruption  fund.10  Probably  a  similar  sum  had 
been  used  to  get  the  franchise  of  the  other  elevated 
railroad,  the  Xew  York. 

The  old  device,  so  familiar  in  railroad  building,  of 
organizing  a  construction  company,  was  employed  in 
the  building  of  the  elevated  railroad:-1.  A  company 
called  the  Xew  York  Loan  and  Improvement  Company 
was  brought  forth  to  carry  on  the  work  of  construc- 
tion. The  same  men  were  directors  of  both  construction 
company  and  elevated  railroad  companies,  and  made 
fraudulent  contracts  with  themselves.17  Such  capi- 
talists and  "philanthropists"  as  George  M.  Pullman, 
John  P.  Kennedy  !s  and  others  profited  heavily  from 

"'•  Railroad  Investigation  of  the  State  of  Xew  York,  1870.  v:  4.-,. 
These  franchises  uri.uinated  during  the  period  of  UK-  Tweed 
regime.  I  he  Xew  York  Legislature  was  then  hem.u  freqnently 
corrupted.  When  the  franchise  for  the  ISleecker  Street  and 
l-'ulton  Ferry  surface  line,  Xew  York  City,  was  obtained.  8434,- 
i*  i<>  of  its  honds  were  dFtribnted  siratuifou-dy.  (See  "The  His- 
tory of  Public  I'ranchiM^  in  Xew  York  City,  p.  ui.) 

'^  Ibid..  12. 

'""Of  Pullman  some  facts  have  been  broMLiT,:  out  in  Vol.  i  of 
this  work.  Another  example  (0  his  m<;h(>ds  and  standard;- 
at  about  tin's  time  may  be  instructive.  After  Jacob  Sharp  h;.d 
bribed  the  Xew  York  City  Board  of  Aldermen  with  ;\"<rO.;nx;  i:: 
ca-'h.  in  1884.  to  ^ive  Sharp  a  franchise  for  a  suriace  railway 
<<;i  Bn>adwav,  the  owner-;  of  the  f ranch! -c  i-'sued  SCKJ.OOO  ir 


these  fraudulent  transactions ;  thev  were,  at  the  saur.,- 
lime,  reaping  wealth  el  ewhcre  bv  many  other  methods 
of  the  same  character. 

After  the  first  two  elevated  railroads  were  built,  a 
new  scheme  of  plunder  was  conceived  and  earried  out. 
A  company  called  the  Manhattan  was  chartered  Vv'ith  a 
capital  of  82,000,000,  ostensibly  to  build  elevated  rail- 
ways, liut  it  did  not  build  a  single  foot;  the  same  clique 
in  control  of  the  New  York  Loan  and  Improvement 
Company  turned  up  in  control  of  the  .Manhattan,  and 
they  leased  the  two  existing  roads  to  the  Manhattan. 
Little  actual  cash  did  this  lease  cost  them;  they  illegally 
increased  the  Manhattan's  capital  stock  from  $2,000,000 
to  $13,000, OCX),  which  amount  they  divided  as  loot.10  Ky 
stockjobbing  methods  Could  and  Sage  then  crushed  out 
most  of  the  small  stockholders,  and  secured  control. 
They  proceeded  to  water  the  stock  still  more,  consoli- 
date the  whole  system,  and  crowd  out  the  more  pow- 
erful stockholders. 


FIKI.I)   Til  KOWX    OTT. 

Certain  of  the  heavy  stockholders,  such  as  Field, 
stood  in  with  Gould  and  Sage,  but  other-  bitterly  fought 
the  various  fraudulent  moves  and  expedients  that  Gould 
and  Sage  brought  into  play.  The  outcome  of  the  en- 
-liing  legal  contest  could  be  forecasted.  Gould  seldom 

-tork   ;:nd  ,S'2.5Of>.rx>o  in   bond-   for  tin-  construction   of  a   railway 
three  miles   in   length,  and  the-   real   coM   of  \vliirh   \va^   only 
-     lO.nou     Tbc-c   bonds    were   nnlruv fully   and    dishonestly    issued. 
i'nllnian   knew   that    fact,   and    also   of  the'  bribery.      In   exchan"-' 
for   cars    --npplird    by    liim.    he    rec'.^-cd    SI.-O.OTJO   of    thc-c    hopd- 
nt    fifty   run-    on    tin-   dollar.— Sec    rcpDrl    of.   and    testimony   b 
tore,    the    Xew    N'nrk    Senate    fnvesiii.'atiny    ('onunilter.    "  ;- 
fVimmittee  —  Broadway    K'ailrnafl.    iKs'.'i":  1X1. 

!!l  Railrrtad  Fnve  libation  nf  the  Slat'1  of  \\-\v  N'nrk,  187';, 
v  :  o  rind  7. 


85 

\vcnt  into  court  without  owning  his  judge.  The  judicial 
tool  this  time  was  Westbrook  of  the  New  York  Supreme 
Court;  when  Gould  had  started  out  in  his  career  of 
theft,  \Yesibn><>k  had  been  his  first  lawyer.  Now  as 
judge,  Westbrook  issued  orders  and  injunctions  backing 
up  Gould  and  Sage's  fraudulent  acts.  Mis  subservience 
\\  as  so  notorious  that  he  once  held  court  in  Gould's  pri- 
vate office  in  the  Western  Union  Telegraph  Company's 
office  and  issued  an  injunction.-0 

After  becoming  absolute  masters  of  the  elevated  rail- 
way sy.-tcms  in  Xew  York  city  Gould  and  Sage  no  longer 
had  any  use  for  Field.  At  the  first  opportunity  the  stock- 
market  was  rigged  to  divest  Field,  and  he  was  thrown 
out  to  linger  and  die  a  ruined  man. 

-'"  Tin-  Xe\v  York  State  Assembly  later  impeached  Judge  \Vcst- 
brook  for  malfeasance  in  office;  hut  from  the  Senate,  as  trial 
body,  he  managed  to  get  a  verdict  of  acquittal. 


CHAPTER   IV 

THE  PRESENT  STATUS   OF  THE  GOULD  FORTUNE 

What  was  the  concrete  result,  the  grand  culmination 
of  Gould's  fifteen  years  of  plundering?  He,  himself, 
gave  a  demonstration  when  on  March  13,  1882,  he  called 
in  Sage  and  other  associate?  and  exhibited  to  them  a 
box  crammed  with  securities.  Disparaging  reports  had 
been  scattered  in  Wall  street  thaKhe  had  been  hard 
hit  by  recent  declines  in  the  stock  market :  and  it  was 
to  belie  these  statements  that  he  summoned  in  witnesses 
to  attest  by  impressive  proofs  that  his  wealth  and  power 
were  unaffected.  He  spread  out  $23.000,000  of  West- 
ern Union  stock;  $12,000,000  of  Missouri  Pacific  stock, 
and  $19,000,000  of  other  stock-.  '  There  is  not  another 
man  in  America  except  Yanderbilt,"  observed  Sage, 
"  who  could  make  such  a  display  of  stock  as  that."  But 
the  securities  thus  revealed  were  only  a  part  of  Gould's 
wealth;  they  did  not  include  many  other  varieties.  Two 
years  later  he  ostentatiously  made  another  and  still 
larger  display. 

Tho^e  heaps  of  stocks  and  bonds  were  the  legal  tokens 
of  this  one  man's  far-reaching  power.  By  their  owncr- 
-lilp  lie  was  vested  not  only  with  the  mastery  of  the 
great  inflowing  revenues  from  numerous  corporations, 
but  the  autocratic  control  over  a  vast  army  of  wage 
workers.  Every  dollar  of  hi?  fortune  had  been  ex- 
horted by  deceit,  bribery,  fraud  and  theft,  yet  here  he 
-.;;-.  one  of  the  dominating  magnates  of  the  country,  the 

86 


owner  of  a  ramification  of  properties,  the  dictator  of  the 
fate  oi  tens  of  thousands  of  workingmcn.  P>ehind  him. 
as  an  impregnable  fortification,  stood  the  Law.  guaran- 
teeing him  the  possession  of  that  which  he  had  seized 
by  theft. 


Hut  a  tew  years  back  and  ( lould  was  buying  law  to 
escape  law;  and  now  here  he  was  unbranded  with  the 
prison  stigma,  thanks  to  his  money,  and  lording  it  over 
the  nation,  lint  ever  there  clung  to  him  that  >ame 
crass,  indiscriminate  brutality  of  method  in  dealing  both 
with  the  powerful  and  the  weak;  just  as  he  struck  hard 
at  competing  capitalists,  without  timiditv  or  mercy,  so 
d.id  he  openly  and  candidly  browbeat  and  terrorize  his 
legions  of  workingmen.  Of  him  it  could  not  be  said  that 
he  shrank  from  assailing  the  strong,  while  overawing 
the  feeble.  Me  warred  on  both  capitalist  and  on  labor. 
organized  and  unorganized,  and  did  so  with  equal  fe- 
rocitv  whether  by  involution  or  frontal  onslaught. 
(  amid  was  not  the  politic  sort  of  magnate  who  cut  the 
pay  of  his  workingmen,  and  then,  as  a  solace,  presented 
them  v,  itl'i  a  tov  philanthropy;  he  did  not  polish  greed 
with  hvpocrisv.  When  he  reduced  the  pav  of  the  work- 
er-- on  his  line1-,  he  did  it  with  a  bold  aggressiveness,  dar- 
ing them  to  challenge  hi--  power. 

l:ew   magnates,   while   in   the   very  process  of  putting 
through  some  colo>sal   fraud,  had  the  hardihood  to  incite 
oi    tln-ir    emploves    and    oi    the    people-. 
to  wail   until  lh>'  agitation  over  their  in- 
had  hern  tempered  hv  a  eertain  lapse  oi 
ai  ••    •;-   pnlic\     m    11     ncca^tun   jtindered 
tlu-  verv  nme>  \vl:en  he  was  del  raiuliiii' 


88          HI: 

and  bribing,  he  belligerently  attacked  his  workers  and 
compelled  them  to  accept  lower  wages.  What  if  a 
public  outcry  should  go  up?  lie  had  been  menaced  with 
many  outbursts  of  fierce,  withal  futile,  public  indigna- 
tion :  they  had  not  interfered  with  his  accumulations  ;  he 
viewed  them  with  a  cynical  scorn. 

In  1881  he  and  his  'clique  were  loaded  down  with 
spoils  ;  the  people  had  grown  exceedingly  restless,  stung 
by  their  poverty,  on  the  one  hand,  and  contemplating 
the  gigantic  wealth  of  the  capitalists  on  the  other. 
Gould  went  ahead  as  if  public  protest  were  as  nothing. 
He  added,  as  we  have  seen,  813.000.000  of  watered  stock 
to  the  capital  of  the  elevated  railroads  in  Xew  York 
city,  and  at  the  same  time  forced  the  agents  and  gate- 
men  on  those  roads  to  submit  to  new  terms.  They  had 
been  complaining  that  they  had  to  work  from  twelve 
to  fifteen  hours  a  day  for  the  wretched  pittance  of  82 
and  81.75  a  day.  Gould  listened  to  their  grievances, 
and  conciliated  them  with  an  order  reducing  their  day's 
work  to  twelve  hours.  But  their  visions  of  scanty  tri- 
umph vanished  when  they  learned  that  he  had  also  cut 
'heir  pay. 

At  the  very  time  that  he  was  looting  the  railroads  in 
the  West,  he  reduced  the  wages  of  the  men  on  the  Mis- 
sotiri  Pacific  and  defied  the  labor  unions,  causing  great 
-trike-  in  1885  and  1886,  by  which,  however,  his  rail- 
road workers  gained  virtually  nothing.  Most  typical  of 
the  servility  of  many  newspapers  and  politicians  were  the 
alm-e  and  obloquy  with  which  the  labor  leaders  who  con- 
ducted those  -trikes  were  overwhelmed,  Let  a  man 
champion  tluj  cause  of  the  oppressed,  and  no  matter  how 
loity  hi-  ideals  or  noble  his  nature,  he  was  at  once  sub- 
jected tn  an  endless  stream  of  ridicule  and  traducing. 
'L  he  servitors  of  the  public  press  and  the  retainers  of 


1'RKSKXT    STA'JTS    OF    'I' I  IK    GOULD    FORTl'NK  80, 

politics  joined  in  a  vicious  persecution  ;  Martin  Irons, 
who  managed  the  Missouri  1'aciiic  strike,  was  defamed, 
hounded  and  blacklisted.  It  was  pitiful  to  see  this  man, 
one  of  the  purest,  best  and  self-sacrificing,  precariously 
compelled  in  after  years  to  sell  peanuts  for  a  living;  and 
he  now  lies  in  an  obscure  grave,  quite  forgotten,  while 
the  remains  of  Gould,  one  of  the  master  thieves  of  the 
period,  repose  in  a  spacious  mausoleum,  and  the  children 
of  Gould  are  among  the  oligarchy  of  families  ruling  the 
United  State-. 


TIIKFT     RKWAROF.l)    WITH     POWER    AND    SPl.KXDOR. 

At  forty-rive  years  of  age  Gould  possessed  more  than 
a  hundred  million  dollars.  He  was  prematurely  old ; 
his  beard  was  streaked  with  gray,  his  hair  thin,  and  his 
swarthy,  bilious,  glowering  face  was  rigid  with  hard, 
deep  lines.  His  form  had  shrunk  so  that  he  looked  more 
insignificant  than  ever  before.  Tint  when  he  traveled, 
no  one  could  mistake  the  evidences  of  sovereign  power. 
From  one  end  of  the  country  to  the  other  he  rode  in  a 
palatial  private  car,  handsomely  appointed,  containing 
every  comfort  and  luxury  then  devised  —  an  observation 
room,  a  parlor,  a  dining  hall,  sleeping  rooms,  a  kitchen 
and  porter's  quarters.  His  yacht,  Atalanta,  was  sump- 
tuous, indeed.  His  manner  of  life  befitted  that  of  a 
full-blown  magnate.  At  Irvington-on-the-Hudson  !v 
sequestered  himself  in  a  great  and  costly  man-ion, 
rounded  by  live  hundred  acres.  Attached  to  it  was  <•  v 
of  the  finest  conservatories  in  the  world.  His  city  resi- 
dence i?i  Xew  York  city  was  a  massive,  somber  brown- 
stone  house  at  the  northeast  corner  oi  Filth  avenue  and 

•rty-seventl]  street,  i:i  the  very  hran  of  the  aristocratic 
:  in 


go       MI  < 

I  le.  however,  had  other  mighty  powers  not  evidenced 
in  outward  display.  For  some  years  he  owned  a  new-- 
paper, the  Xew  York  "  World  "  :  a  curious  sight  it  was 
to  see  one  of  the  great  pirate-,  who  manv  a  time  had 
narrowly  escaped  prison,  intruding  the  public  as  to  it- 
duty,  moral,  political  and  otherwise.  But  the  known 
lact  that  Gould  owned  this  newspaper  helped  to  dis- 
count its  utterances  and  reduce  its  circulation.1 

A  much  more  successful  and  insidious  method  of  in- 
fluencing public  opinion  was  bv  his  control  of  the  West- 
ern l/nion  Telegraph  Company,  and.  through  that  corpo- 
ration, of  the  Assi  elated  Press,  the  foremost  news  dis- 
tributing agency  in  the  United  States.  Distorted,  mis- 
leading or  false  news  dispatches  were  manufactured  or 
artfullv  colored  and  -upplied  to  the  public  press.  These 
not  only  gave  Gould  superior  underhand  facilities  for 
influencing  the  course  of  the  stock  market,  but  they 
were  also  used  in  favor  of  capitalists  and  against  labor 
and  radical  movements  at  every  opportunity.  The  pub- 
lic \vas  fed  on  grossly  perverted  news  accounts  of  strikes 
and  labor  and  political  movements;  upon  this  fabricated 
new.-  the  newspaper  owner-,  themselves  capitalists  or 
largely  servile  to  capital,  l^ed  hostile  if  not  malevolent 
editorial-;  and  the  combination  of  the  whole  was  used 
to  prejudice  the  ma--  of  the  public  against  anv  move- 
ment or  agitation  threatening  the  complete  sway  of 
capital. 


the  block  fronting  his  Xe\v  York  citv  mansion  he  would 
nervously  pace  for  hours  during  the  long,  shadowy  vigils 
of  the  night  —  a  little,  shrunken,  cankered  man  vainly 
endeavoring  to  tire  his  mind  and  frame  into  an  exhaus- 
tion compelling  sleep.  He  died  on  the  morning  of  De- 
cember 2.  1892,  and  his  body  was  interred  in  a  classic 
mausoleum,  costing  Si  10,000,  in  \Yoodlawn  Cemetery. 
Many  multimillionaires,  whose  ways  and  station  were 
akin  to  (iould's,  and  some  of  whose  careers  were  inter- 
woven with  his,  showed  up  at  the  funeral  services.  Rus- 
sell Sage  was  there,  and  J.  Pierpont  Morgan  and  Collis 
1'.  Huntington  and  a  group  of  others  —  an  impressive 
procession  of  money  lords  with  appropriate  visages  and 
attired  in  the  immaculate  garb  of  mourning,  although 
not  a  soul  really  mourned  Gould  save  his  own  family. 
His  will  disclosed  an  estate  of  nominally  877.000,000, 
but  this  was  merely  the  exoteric  side  of  the  testamentary 
document;  the  e-tate  amounted  to  far  more.  All  was 


nates.  Gould  did  not  transmit  the  bulk  of  his  wealth  to 
hi-  eldest  s<  in. 

Xow,  when  fav  Gould  died,  many  newspaper-owning 
scavengers,  who  during  his  lifetime  had  bootlicked  him 
or  kept  fearfully  silent,  belched  forth  vituperation  and 
rehearsed  his  odious  deed-. 

Their  misrepresentations  consisted  not  in  exaggerating 
hi>  evil  —  that  were  not  possible  — but  in  singling  him 
out  as  an  exceptional  defrauder,  and  in  detaching  him 
from  'he  system  whirl:  produced  him  and  which  alone 
could  be  held  responsible. 

Guiild  parsed  a\va\    ihe  mo>1  haled  man   in  the  United 

Sue:;;1   amM'i    ns  hr.d   never  Concerned  him.   Inil 

hi-  chil  Iren  devel<  '  ed  the  vearning  U  r  recognition.      At 


every  step,  at  first,  there  came  an  outrush  of  the  old 
taunt  that  their  father's  fortune  had  come  from  ] ullage 
and  wrecking.  Yet  all  of  the  founders  of  fortunes  were, 
without  a  single  exception,  of  a  stripe  ;  all  had  tricked, 
:;cd.  deceived,  bribed,  defrauded  and  stolen. 

With  hundreds  of  millions  of  dollars,  however,  at 
their  command  the  (loulds  were  able  to  overcome  all  so- 
cial obstacles.  When  one  has  money  enough  an  elect 
social  position  does  not  have  to  be  accorded  ;  it  can  be 
taken  by  assault.  One  of  the  easiest  routes  is  by  buying 
an  entree  into  the  caste  of  European  titled  nobility,  which 
in  the.-e  bu.-iness  days  does  a  lively  trade  huckstering 
names  for  cash.  Accordingly,  in  1895  Anna  Gould,  one 
of  Jay's  daughters,  was  transformed  into  the  Countess 
de  Castellane.  and  the  Count  received  the  opportunity 
of  requisitioning  manv  of  the  Gould  millions.  During 
the  next  eleven  year-  lie  right  jovially  availed  himself 
of  it.  and  squandered  millions  with  a  fine  prodigality, 
and  went  through  fantastic  antics  until  a  divorce  cruelly 
put  a  .-top  to  them.  But  Aline.  Gould  a-cended  still 
higher  in  the  pages  of  the  Almanach  de  Gotha.  The 
Count'-  successor  is  the  Prince  de  Sagan.  a  perceptive 
scion  who  i-  doing  his  valuable  part  in  demonstrating 
how  the  feudal  nobk-.-.  often  deprived  of  their  -tolen 
c.-tates  at  hume  bv  revolution  and  dis.-ipation,  can  lei- 
-urery  recoup  by  allying  themselve-  with  estates  stolen  in 
newer  countries 


Tn  lav  to- 1  much  .-tre-s  upon  the  social  a.-piratinn-  and 
doing-  of  the  Gould  family  would  obscure  the  titanic 
industrial  conflict  in  which  thev  have  been  engaged.  Af- 
ter Jay  Gould'-  death  the  wealth  and  possession-;  of  the 


family  grea'ilv  increased  and  iis  conquests  were  ex- 
tended.' 

i'>t;t  this  process  has  noi.  been  allowed  to  continue  un- 
restricted. The  last  few  years,  as  \ve  have  already 
pointed  out,  have  ushered  in  a  terrific  contest  for  tii.' 
exclusive  mastery  of  the  nation's  resources.  Looking 
hack  fifty  years,  \ve  see  a  large  number  of  petty,  conse- 
quential industrial  bosses,  each  running  his  own  little- 
railroad  or  factory.  A  change  then  takes  place  ;  great, 
energetic  capitalists  develop,  who  make  war  upon  the 
petty  bosses  and  by  fair  means  or  foul  crush  them,  seize 
their  properties  and  consolidate  these  into  great  systems. 
The  petty  railroad  owners  disappear  and  their  places  are 
taken  by  such  overbearing  magnates  as  the  Vandcrbilts, 
the  Goulds,  Huntington,  Morgan,  Hill,  and  the  like.  Ten 
years  ago  all  of  these  men  were  magnates  of  colossal 
power,  each  heading  some  great  system,  and  despotically 
dictating  over  some  particular  domain. 

Xow  another  stage  in  the  process  of  industrial  evolu- 
tion is  being  reached  which  signifies  the  decline  of 
overlords  of  the  Gould  type,  and  which  foretells  the 
approaching  climax  of  capitalist  institution-.  Mighty 
as  these  magnates  have  been,  they  are  gradually  and 
inexorably  being  subordinated  by  a  still  mightier  power, 
the  most  puissant  of  all.  The  aim  of  this  all-pervading 

-  Many  of  the  large  properties  of  which  they  became  owners. 
dr  partial  owner.--,  had  a  broad  foundation  of  fraud.  While 
neither  Jay  (iould  nor  his  children  committed  the-e  paiticular 
fraud-;,  yet  they  benefited  by  the  original  frauds.  The  Co'o-ado 
( '( i;d  and  iron  Company  is  a  case  in  instance.  In  a  •  mt  broiuii; 
in  iS<;7  to  vacate  the  land  title  of  thi--  company,  the  Govertvneiv 
charged  that  the  company's  ci.al  and  mineral  lands  had  been  <  .!> 
t nined  by  conspiracy  and  fraud.  The  lower  court?  sustained  the 
Government,  but  the  Supreme  ('our'  of  the  I  nitcd  State-  decided 
thai  although  undi  >uhtrd!y  fraud  h:.d  been  used,  yet  the  proof 
presented  was  not  sulncient  for  an  adverse  decision.— Supreme 
Conn  Repi  irter.  viii  :  131-141. 


94 

power  is  industrial  absolutism;  and  in  the  pursuance  of 
this  inevitable  end  it  is  grinding  down  all  opposition 
even  as  the  GoukK  the  Yanderbilts  and  others  have 
squelched  lesser  magnates  heretofore.  Xo  longer  are 
the  Goulds  able  to  extend  their  power  much;  the  climac- 
teric period  has  arrived  when  they  have  to  fight  hard  to 
retain  what  they  have. 


TII1-:   KISIXG    AUTOCRACY. 

This  supreme  power,  clutching  at  every  form  of  the 
production  and  distribution  of  products,  is  the  Standard 
Oil  Company,  headed  by  the  Rockefellers. 

Thirty-five  years  ago  it  obtained  a  monopoly  of  oil 
products  by  getting  secret  railroad  rates,  and  by  other 
crushing  methods.  At  first  it  ingratiatingly  approached 
the  railroad  magnates  as  a  supplicant  seeking  favors. 
Soon,  as  a  matter  of  policy,  it  made  these  magnates  shar- 
ers in  its  profits.  Then  it  began  to  buy  its  way  into  the 
ownership  of  railroads.  Its  profits  have  been  so  fabu- 
lously vast  that  it  has  been  under  the  constant,  uncs- 
capable  necessity  of  reinvesting  its  vast  surplus,  ever 
growing  vaster.  This  surplus  it  has  applied  to  buying 
up  railroads,  bank,  mine,  public  utilitv  and  industrial 
stocks  and  securities  of  all  descriptions.  With  this  fixed, 
unchanging  policy  its  power  grew  to  such  an  extern  that 
its  members  began  to  push  themselves  in  as  director-,  oi 
a  great  variety  of  corporations.  For  a  period  it  then 
carried  on  a  policy  of  having  "a  community  of  inter- 
est'' with  the  large  magnates  in  every  field:  of  working 
in  cooperation  with  them  in  determining  industrial  mat 
ters.  I'ut  during  all  of  this  time  it  wa<  encroaching! . 
buving  mere-  and  more  stocks  of  all  kinds;  so  that  now 
it  ha-;  arrived  at  tin*  point  where,  operating  through  such 


GEORGE  GOULD. 

Eldi-st  Son  of  J.  Gould,  and  Chief  Wielder  of  the  Gould  Fortune. 


general-;  as  Mir  laiely  lepartcd  I  larriman,  it  is  gradu- 
ally  forcing  the  \'aiulcrbilts.  the  ( ion!.'!--  and  oilier  first- 
rank  magnates  of  a  decade  ag< >  to  a  secondary  place, 
and  entrenching  itself  in  autocratic  authority.  Several 
of  the  railroads  long  ruled  over  by  the  Goulds  have  be- 
come, to  a  considerable  extent,  Standard  Oil  adjuncts. 

Industrial  battles,  such  as  that  between  George  Gould 
and  the  Pennsylvania  Railroad  in  1902,  will,  as' occur- 
rences, soon  be  extinct.  This  warfare  arose  over 
( iould's  project  to  extend  the  AYabash  Railroad  to  the 
Atlantic  seaboard.  The  Pennsylvania  Railroad  promptly 
objected  to  a  competitor  in  its  richly  profitable  territory. 
The  ensuing  struggle  was  fought  out  in  legislatures, 
common  councils,  courts.  Congress,  and  by  actual  phys- 
ical force.  So  completely  have  the  Pennsylvania  Rail- 
road magnates  ruled  that  State  for  fifty  years  ihat  it  did 
require-  considerable  temerity  on  Gould's  part  to  war 
upon  them."' 

3  As  an  instance  of  the  exercise  of  the  Pennsylvania  Railroad's 
great  political  power,  the  following  account  is  significant.  1; 
shows  ho\v  Cassatt,  president  of  that  railroad,  and  a  few  other 
industrial  magnates  and  political  bosses,  decided  that  Philander 
Knox  (at  present,  1010.  United  States  Secretary  of  State) 
should  be  chosen  a  raited  States  Senator.  Knox  was  long-  a 
corporation  lawyer.  The  Governor  of  Pennsylvania  was  ordered 
to  ratify  the  choke  of  this  gr-np  of  pnliiicnl  dictators,  and  did 
so.  "I  his  account  was  published  editorially  in  "Collier's 
Weekly,"  i-Mie  of  June  S,  1007.  and  rcpuhlished  in  the  same 
peri' 'dical.  issue  of  X<>vei;;l>er  2~.  [909,.  !t-  accuracy  was  not- 
disputed,  and  no  denial-  were  made,  or  suits  for  libel  brought. 
The  account  read  : 

"Mr.  Knox's  pulitical  g'ene.- is  had  for  i1^  -etting  the  genera! 
>ithces  01  t!ie  I'enn.^ylvania  Railroad  in  Philadelphia.  There 
met,  to  name  a  sii  e>M>r  fur  (he  recently  decea.-ed  Ouay,  Sena- 
tor Penrose.  Henry  ('.  I;rick.  ']•/.'  Durham,  tiie  Philadelphia 
boss,  who  was  tlu-n  at  the  height  of  his  power,  and  the  late 
President  Cassatt.  ['etween  tl;e  p  li  i  and  the  t\\o  mei  ' 

business  a  in.idit.t  was  arranged.  K;ii'X  ^knjiild  be  Seiiator. 
.  .  .  Then  the  party  adjourned  i''  dinner  a;  President  Cas- 
satt's  liou.-e.  Tn  tlii-  was  invi'Kl  (Jovernor  Pennypacker,  who 
hcid  the  app' >int ing.  \\'hi!e  the  resl  tinkered  the  walnuts,  \\-u- 


'/>  M  l-;  H'XV    Or     'I  ill:    CKKAT 

(  >:ic  oi  i!ic  most  marked  instances  .-bowing  the  ex- 
tremes lhat  the  Pennsylvania  Railroad  magnates  went  in 
their  rule,  was  the  Riot  Indemnity  bill  which  thev  at- 
tempted in  1879  to  get  the  Legislature  of  that  State  to 
pass.  It  is  advisable'  to  present  a  sketch  of  the  circum- 
stances of  this  bill,  inasmuch  as  it  gives  a  good  idea  of 
the  methods  of  A.  J.  Cas>att,  long  the  president  of  the 
Pennsylvania  Railroad.  It  was  Cassatt  whom  George 
Gould  had  to  fight  in  1902;  the  methods  Cassatt  used 
in  1879  were  the  methods  lie  invariably  used.  \Yith 
all  his  unscrupulousness  Jay  Gould  never  had  the  face  to 
do  anything  approaching  in  enormitv  the  Riot  Indemnity 
bill  of  Cassatt.  Vet  when  Cassatt  died  recently  the  most 
lavish  eulogies  were  everywhere  published;  he  passed 
away  in  the  full  attributes  of  superior  respectability. 


\\  e  have  seen,  in  an  earlier  chapter,  how  the  Penn- 
sylvania Railroad's  officials,  during  the  great  strike  of 
18/7,  ordered  their  agent-  to  set  a  number  of  worthless 
freight  cars  at  I'ittsburg  on  fire,  in  order  to  charge  the 
strikes  with  being  riotous,  and  so  have  a  pretext  for 
calling  out  the  military. 

That  very  crime  of  arson  these  magnates,  two  years 
later,  made  the  basis  for  an  attempt  at  plundering  the 
people  out  of  84.000,000  at  one  grab.  In  the  whole  in- 
dustrial historv  of  the  country  no  avowedlv  bolder 
-cheme  had  ever  been  tried  before.  When,  in  [87'],  a 
bill  \vas  introduced  in  the  Pennsylvania  Legislature  to 
indemnify  the  railroad,  to  the  amount  of  about  $4.000,- 

rri?c  invited  the  Governor  into  thr  liack  yard  to  look  at  the 
moon.  '  Tt'-^  Knox.'  said  Pcnrose  to  tlu-  Governor.  .And  Knox 
it  \va-.  .  "I  < i  thi-  rarrative  some  minor  intcresl  i-  lent  by 

tlic   faci    thai    Prc-sidi-nt    rassatt    \va-   a   Democrat. '" 


OOO,  for  the  loss  of  property,  the  news  was  received  with 
general  amazement.  Oissatt  pushed  the  bill,  and  it 
would  have  become  law  had  not  some  of  the  legislators 
revolted  at  the  brazenness  of  the  plan.  A  few  de- 
nounced it  as  a  monstrous  fraud;  one,  in  particular.  Rep- 
resentative Wolfe,  charged  that  bribery  was  being  used, 
and  demanded  an  investigation.  Whereupon,  a  commit- 
tee of  investigation  was  appointed  on  April  9.  1879. 

The  report  of  this  committee  specifically  stated  that 
three  members  of  the  Legislature  had  been  guilty  of 
bribery.  From  the  evidence  it  was  clear  that  Cassatt 
and  Quay- — -the  latter  a  corrupt  politician  at  the  head 
of  the  Pennsylvania  Republican  machine  —  had  leagued 
forces  to  rush  the  bill  through  ;  that  many  members  had 
been  bribed  either  with  money  or  with  promises  that  cer- 
tain bills  of  theirs  would  be  passed  ;  that  corrupt  com- 
binations existed  among  members  to  pass  important  leg- 
islation, and  that  many  editors  of  influence  throughout 
the  State  had  been  bought  to  advocate  the  passage  of  the 
bill.4 

A    WAR  OK    Ml   LTI. \ni.LIOXAIRK.S. 

Such  were  the  ways  of  C'assatt,  the  head  of  the  forces 
that  ( ieorge  (lould  had  to  encounter.  Of  all  result-, 
Gould  sought  most  to  get  an  entrance  into  Pitt-burg 
with  its  stupendous  annual  traffic  of  75.000,000  tons. 
The  government  of  that  city  was  owned  by  the  Penn- 

1  Pel  ruff.  Kemlile,  Suiter.  Ruir,'cn?er  rind  Crnvfnrd,  nil  lejr!.-- 
!;;;'.'~:-  or  lobbyists,  were  comieted,  hi  iS^o,  oi  hril'i.-ry,  and  each 
'  :  -  -enters  !  to  a  year's  i:>r>n-  ••"  :-:  !:i  passing  sentence 

j  ••'':•.•  !  V;:r  ;  r  marked  ill:;!  '  "' i'  : .  "  i  '•  •  'i  a  common  occnr- 
r  pre  i1:  t]v  I  Vnnsylv.'.nia  l.ev.i- li'ti.ro  i~;>r  years. 

";    ,  ;i';- .;',.: ii    the   coi'rr.i.iiiin    ai^-iu::.:;:    the   attempted    v>a--a^e 

I 


0,8 

\lvania  Railroad.  But  what  of  that?  If  money  could 
put  in  and  run  one  set  of  officials,  money  could  also 
put  in  another  set.  So  George  Gould  deeided.  and 
rightly.  The  government  of  Pittsburg  now  became  the 
.-take  :  Gould  adroitly  caused  the  question  of  the  entry 
of  the  Wabash  Railroad  to  be  made  an  issue  of  the 
municipal  election  of  1902. 

Backed  by  his  millions,  so  it  was  said,  a  ''  reform  " 
movement  was  generated  and  blown  into  lusty  growth. 
Gould  carried  his  point  :  a  Common  Council  favorable 
to  his  plans  was  elected.3  At  the  same  time  Gould  had 
a  bill  passed  by  Congress  allowing  him  to  bridge  the 
Monongahela  River.  The  statement  has  been  made  that 
it  cost  him  $12,000.000  to  get  an  entrance  into  Pittsburg, 
but  the  documentary  proof  is  wanting.  After  spending 
$35.000,000,  he  carried  through  his  \Yabash  plans. 

Xow  the  warfare  of  force  began.  In  retaliation  for 
Gould's  victory,  the  Pennsylvania  Railroad  magnates  or- 
dered all  of  his  Western  Union  Telegraph  poles  along 
that  railroad's  right  of  way  to  be  cut  down.  If  the 
telegraph  operator.--  had  gone  on  a  <trike,  the  cry  would 
have  been  raised  that  they  were  dangerously  interrupting 
an  essential  public  business,  but  violence  when  com- 
mitted by  magnates  was  held  a  -acred  right  of  property. 
and  no  protects  of  Government  officials  were  heard. 

This  transaction  has  been  only  one  of  main'  of  those 
of  corporations  controlled  largely  or  partially  by  the 

Thi-  "reform"  movement  \va-  In-raided  as  one  which  would 
;-;•!;••!  raic  1'itt -hurv.  The  increasing  o  irruption,  cau-ed  by  the 
•.  i.-s  interests  in  hnbiny  puMic  hodie-.  \va-  evidenced  re- 
•  -nly.  Tile  c<>n\  ictiou  of  o-;e  of  the  principal  bribe  taker-  wa- 
followed  hy  hi-  cnnfes>i-in.  and  hy  tlic  confessions,  in  Marc!1. 
\<>io.  nf  many  mr.rc  memhcr-  of  (lie  Pitt-hnru"  Common  Council 
These  confessions  ili-cln-cd  a  vast  sysu-m  nf  lirihery  hy  sterl 
macrnates,  hank-  arid  other  business  in'"rest->.  \t  tlie  present 
\vritiii"  '  April,  1010).  forty-one  councilnien  arc  under  indict- 
nit-n1.  and  more  than  a  -core  of  others  have  confessed. 


PRESENT    STATUS    OK    THK    Got'LD    I'OKTUNK  99 

present  generation  of  Goulds,  in  a  work,  being  pub- 
lished serially  at  the  present  writing  (1910),  and  written 
by  Judge  I' en  B.  Lindsey.  a  public-spirited  juri.-t  who 
has  the  most  intimate  knowledge  of  Colorado  affairs, 
Judge  Lindsey  reveal-  in  detail  some  extent  of  the  cor- 
ruption in  that  State.  lie  tells  how  nearly  all  of  the 
officials  and  judges  are  corporation  tools;  how  vast  num- 
bers of  fraudulent  votes  are  counted  at  elections ;  and 
how  the  corporations  have  dictated  the  election  or  ap- 
pointment of  main-  of  the  very  judges  whose  decisions 
have  been  so  oppressive  to  the  working  class.  In  par- 
ticular, lie  tells  at  length  how  Governor  Peabody  was 
fraudulently  declared  elected  in  1905,  and  how  Peabody 
had  bargained  to  appoint  to  Supreme  Court  judgeships 
certain  men  named  by  the  corporations.  Lindsey  goes 
on: 

Does  this  seem  incredible?  Read  then  the  Colorado  Supreme 
Court  Reports,  Vol.  35,  page  325  and  thereabouts.  You  will  find 
it  charged  that  the  Colorado  and  Southern  Railway  Com 
pany,  the  Denver  and  Rio  Grande  Railway  Company,  and 
the  public  service  corporations  of  Denver  had  an  agreement 
with  Governor  Peabody  whereby  these  corporations  were  to 
be  allowed  to  -elect  the  judges  to  be  appointed  to  the 
Supreme  Bench.  You  will  rind  it  charged  that  Luther  M. 
Goddard  had  been  selected  a-  a  proper  judge  by  the  public 
utility  corporations,  but  that  the  two  railroad  companies  ob- 
jected to  him  as  "too  closely  allied  with  the  interims  of  the 
Denver  City  Tramway  Company  and  the  Denver  I'm'on  Water 
Company."  "As  a  last  resort."  the  statement  continues,  "the 
agent  and  representative  of  the  said  Colorado  and  Southern 
Railway  Company  was  induced  to,  and  did,  after  midnight  on 
Sunday,  the  eighth  day  of  January,  and  at  about  one  o'clock 
in  the  morning  on  Monday,  the  ninth  day  of  January,  repair 
to  the  home  of  the  said  Luther  M.  Goddard,  in  a  carriage,  call 
ing  him  out  of  bed.  having  then  and  there  Mich  conversation 
with  the  said  Goddard  that  the  said  railway  corporations, 
through  their  agents,  withdrew  their  opposition  to  hi-  eonfirma 


t:-''n,  ai  (1  they  did  on  .-aid  ni"rning  at  about  throe  oViock  thereof 
announce  to  the  remainder  of  the  said  corporations  through 
ihcir  said  agents  and  representatives,  that  their  opposition  had 
been  withdrawn,  and  the  withdrawal  of  the  said  opposition 
having  been  announced,  the  said  senate  of  the  Fifteenth  Gen- 
eral Assembly  did.  almost  immediately  upon  its  convening  on 
the  morning  of  Monday,  the  ninth  day  of  January,  confirm  the 
said  nomination  of  the  said  Goddard." 

The  brief  containing  these  charges  is  signed  by  Henry  M. 
Teller,  Ex-Cabinet  member  and  United  States  Senator,  and  by 
Ex-Governor  Thomas  acting  as  counsel  for  Senator  T.  M.  Pat- 
terson, who  had  made  the  charges  in  his  paper,  The  l{<>cky 
Mountain  Xczcs.  These  gentlemen  offered  to  prove  the  charges 
before  the  Court,  but  the  Court,  in  a  most  amazing  decision,  re- 
fused the  offer,  held  that  no  matter  how  true  such  charges  might 
be,  it  was  "contempt  of  court"  to  make  them,  and  lined  Sena- 
tor Patterson  Si.ooo!  .  .  /• 

And  so  it  seem-,  if  such  charges  a?  these  are  true, 
that  the  present  Goulds  are  continuing  the  methods  of 
their  lather.  It  may  aLo  be  well  assumed  that  these 
public  revelations  are  only  indications  of  extensive  under- 
ground practices  and  transactions  many  of  which  are 
never  publicly  discio.-ed. 

Slowly  sliding  downward,  as  it  is.  to  a  relinquishing 
place  in  the  ranks  of  wealth  when  compared  with  such 
fortunes  and  power  as  Rockefeller's,  the  Gould  family 
is  nevertheless  prodigiously  rich.  Forty  years  ago  Jay 
Gould  was  doing  his  best  to  keep  out  of  prison  ;  to-day 
his  children  and  grandchildren  live  in  gorgeous  palace?. 

Georgian  Court  at  Lakewood,  X.  J.,  one  of  the  homes 
<  f  George  Gould,  is  emblematic  of  their  splendor.  Built 
in  the  Georgian  style  of  architecture,  the  main  part  is 
two  hundred  feet  long  and  fifty  wide.  The  great  main 


I'KKSKNT    STATUS    OF    Til  1-1    lluL'LD    FORTUNE  1OI 

hall  is  thirty  feet  wide  and  fifty  long;  at  one  end  is  a 
massive  elliptical  staircase  of  marble  and  bronze,  sup- 
ported by  marble  columns,  and  at  the  other  end  a  superb 
marble  fireplace.  Around  three  sides  of  the  hall  is  a 
mural  painting  sixteen  feet  high  and  eighty  feet  long  — 
a  depiction  of  the  "  Canterbury  Pilgrims  "  from 
Chaucer.  A  hundred  and  fifty  pendants  of  cut  glass 
radiate  prisms  from  the  chandelier.  The  furniture  in 
this  hall  is  of  Louis  XIV.  style,  blazing  with  powdered 
gold  and  covered  with  dee])  crimson  velvet.  This  palace 
contains  thirtv  rooms  for  the  use  of  George  Gould's 
family  and  guests.  The  very  bedstead  in  which  George 
Gould  sleeps  cost  $25.000.  And  all  around  this  gray 
and  white  mansion,  gray  stucco  covering  brick  walls, 
are  fairy-like  Italian  sunken  gardens  filled  with  statuary 
and  magnificent  fountains.  Connected  with  the  man- 
sion is  a  court,  built  at  a  cost  of  8250,000,  wherein  is  a 
great  tanbark  hippodrome,  a  gymnasium,  bowling  alleys 
and  lounging  rooms,  a  shooting  gallery,  a  large  swim- 
ming poo!  and  Turkish  and  Russian  baths. 

And  this  is  only  one  of  the  many  palaces  of  the  mem- 
bers of  the  Gould  family.  Whence  all  of  this  wealth 
and  splendor  came  is  now  an  open  book  ;  no  enigma  are 
its  sources,  but  a  prolonged  tale  of  fraud  and  theft, 
whereof  the  most  vital  facts  only  have  been  herein 
brought  out. 


CHAPTER  V 
THE   BLAIR   AND   THE    GARRET!    FORTUNES 

Of  John  I.  Blair  little  is  now  heard,  yet  when  he  died 
in  1899,  at  the  age  of  ninety-seven,  he  left  a  great  per- 
sonal fortune,  estimated  variously  at  from  $60,000,000 
to  $90.000.000 ;  his  wealth,  descending  largely  to  his 
son,  De  \Yitt  C.  Blair,  forms  one  of  the  notable  estates 
in  the  United  States.  Here,  according  to  the  purveyors 
of  public  opinion,  was  an  honest  man  ;  here  incontestably 
was  a  capitalist  of  ''  rare  business  instinct,"  whose  for- 
tune came  from  pure,  legitimate  and  upright  methods. 

I;<T  more  than  half  a  century."  said  one  newspaper 
editorial1  at  his  death,  "he  has  been  one  of  the  leading 
business  men  in  the  countrv,  and  for  more  than  a  quar- 
ter of  a  century  one  of  the  richest  men  in  the  world, 
his  fortune  being  estimated  at  from  $50,000,000  to  $100,- 
ooo.ooo.  every  farthing  of  which  came  to  him  through 
legitimate  channel:-,  creating  other  wealth  on  its  way  to 
him.  as  well  as  after  it  had  reached  his  hands."  This 
was  TK.it  an  isolated  eulogy;  round  and  round  the  col- 
umns of  the  press  went  these  pagans  with  never  a  dis- 
sent or  demurring. 

AX    INQUIRY    INTO    lil.AIR's    CAREER. 

Through  all  of  these  weary  pages  have  we  searched 
afar  with  infinitesimal  scrutiny  for  a  fortune  acquire-1 
bv  hnne-t  means.  Xor  have  ihc  methods  been  measured 


JOHN  I.   BLAIR. 


T11K     BLAJU     ,'.?ilv    (i. \KKi.Il      I  ( )K  I  I   N  KS  1OJ 

by  the  test  of  a  r.o;le  of  advanced  elhics,  but  solely  by 
the  laws  as  they  stood  in  the  respective  times.  At  no 
time  has  the  discovery  of  an  "  honest  fortune  "  rewarded 
our  determined  quest.  Often  we  thought  that  we  had 
come  across  a  specimen,  only  to  find  distressing  disap- 
pointment ,  through  all  fortunes,  large  and  small,  runs 
the  same  heavy  streak  of  fraud  and  theft,  the  little 
trader,  with  his  misrepresentation  and  swindling,  differ- 
ing from  the  great  frauds  in  degree  only.  Have  we.  at 
last,  in  Blair's,  stumbled  upon  one  fortune  unblemished 
by  any  taint  whatsoever?  Can  we  now  exclaim, 
Eureka!  So  it  would  seem  if  current  comment  is  to  be 
swallowed  as  the  fact.  But  inasmuch  as  we  have  dog- 
gedly developed  an  exploring,  if  not  a  perversely  skep- 
tical turn  of  mir.d,  let  us  gratify  it  to  the  full  by  investi- 
gating the  career  of  this  paragon  of  commercial  virtue. 

Xow  it  does  so  happen  that  whatever  the  reserved. 
sequestered  Jife  lilair  led  in  his  dotage,  basking  in  the 
titular  glory  of  wonderful  business  man  and  philanthro- 
pist, he  left  a  large,  resounding  impress  upon  industrial 
events  of  fifty  and  sixty  years  ago.  The  surviving  rec- 
ords, buried  in  obscurity,  emerge  from  their  forgotten 
shelves  to  confound  the  fairv  tales  of  present-day  eulo- 
gists. Me  was  contemporaneous  with  Commodore  Yan- 
lerbilt,  the  first  John  Jacob  Astor,  and  Kiis-ell  Sage;  and 
he  was  as  excellent  a  business  man  as  any  of  them, 
tvhich  is  to  sav.  his  methods  were  relatively  the  same 
HS  theirs.  While  Aslor  was  proving  hi>  talent  as  ;i  suc- 
cessful business  man  by  debauching,  swindling  and  mur- 
dering Indian  tribes,  and  while  Yandcrbilv  was  black- 
mailing, and  Sage  was  bribing  and  embezzling,  Blair 
was  demonstrating  in  his  mvn  wav  that  he.  too,  had  all 
the  necessan  qualifications  ol  "a  leading  business  man." 

I'orn   near    I'elvidere.    X.    |.,  in    iSnj.  Ins  parents  were 


IO4        HISTORY    OF    THE    GREAT    AMERICAN    FORTUNES 

farming  folk;  and  his  biographers  relate  with  a  blissful 
smack  of  appreciation  that  when  he  was  a  very  young 
boy  he  annouiu-jJ  to  his  mother  that,  "  I  could  go  in 
for  education,  but  I  intend  to  get  rich."  Like  Sage,  he 
started  as  a  clerk  in  a  country  store,  and  he  then  wid- 
ened into  being  the  owner  of  a  general  merchandise 
store,  at  what  is  now  Blairstown,  New  Jersey.  Years 
passed  and  he  prospered,  his  panegyrists  tell,  and  he  then 
opened  a  number  of  branch  stores.  But  this  part  of 
his  career  is  shrouded  in  mere  tradition ;  nothing  au- 
thentic is  known  of  his  methods  at  the  time. 


BLAIR   AS   A    RAILROAD  BUILDER. 

Blair  next  turned  up  as  the  owner  of  an  iron  foundry 
at  Oxford  Furnace,  N.  J.,  and  it  is  from  this  point  of 
his  career  that  definite  facts  are  embodied  in  official 
records.  ''  The  necessity  for  transporting  the  metal  to 
the  seaboard,"  says  one  biographer,  "  led  Air.  Blair  and 
others  to  organize  the  Lackawanna  Coal  and  Iron  Com- 
pany, out  of  which  has  grown  the  great  system  of  the 
Delaware,  Lackawanna  and  AYestern  Railroad."  With 
this  all-inclusive  sentence  the  biographer  airily  dismisses 
this  part  of  the  subject.  Hut  there  are  weighty  reasons 
whv  we  should  dwell  upon  it,  with  brief,  yet  sufficient 
explanation,  for  it  was  in  this  operation  that  Blair  made 
his  first  millions;  it  was  here  that  he  gave  the  first  scin- 
tillating demonstrations  of  his  "  rare  business  instincts." 

I  fad  it  not  been  for  an  acrimonious  falling  out  be- 
tween him  and  his  associates  in  this  railroad  business, 
the  truth  would  be  beyond  reach.  As  it  is.  these  men 
made  the  huge  error  of  perpetuating  their  quarrel  in 
print;  an  unpardonable  blunder  if  the  good  opinion  of 
posterity  is  to  he  held.  This  quarrel  arose  over  such  a 


TI1K    r.LAIR    AND    liARRKTT    FORTUNES  105 

sordid  matter  as  the  allotment  of  graft;  it  was  a  bitter, 
ungentlemanly  row,  as  is  all  too  clearly  evidenced  in  the 
biting  denunciations  of  one  another  that  were  put  in  the 
reports  by  the  disputants  themselves.  From  these  re- 
ports it  appears  that  l>lair  was,  indeed,  doing-  business 
in  the  accustomed  style;  he  was  selling,  at  excessive 
prices,  the  products  of  his  mill  to  a  railroad  corporation 
of  which  he  was  a  director,  and  individually  building 
branch  lines  which  he  foisted  at  enormous  profit  upon 
the  corporation. 

The  Delaware,  Lackawanna  and  Western  Railroad, 
now  one  of  the  very  richest  in  the  land,  was  organized 
in  1850  by  the  grouping  of  a  number  of  small,  separate 
lines.  To  secure  franchises  and  special  rights  and  aid, 
the  usual  procedure  of  bribery  was  resorted  to,  and  with 
unfailing  success.  The  men  at  the  head  of  it  knew  their 
slippery  trade  well ;  they  were  the  same  rich  merchants 
who  were  involved  in  many  another  fraud.  Some  ot 
them  we  have  accosted  before  in  these  chapters - 
(ieorge  1).  1 'helps,  John  J.  ! 'helps,  William  K.  Hodge. 
Moses  Taylor  and  others.  With  ]ohn  I.  1'lair  these  men 
formed  the  board  of  directors  of  the  Delaware,  Lacka- 
wanna and  Western  Railroad  Companv. 

One  of  the  separate  lines  incorporated  in  this  railroad 
was  the  Warren  line,  crossing  Xew  Jersey  into  Pennsyl- 
vania. The  building  of  this  road,  as  nearlv  as  can  be 
made  out  Irom  the  law  record-.  wa-  attended  with  some 
very  peculiar  circumstances.  Two  set'-  of  capitalists 
were  competing"  for  a  fnuichi.-c  to  extend  their  railroads 
through  the  mountains  to  ihe  Delaware  Water  dap: 
one  wa-  the  Morris  and  Kssex  Railroad  (/ompanv.  the 
''ther  the  \\arren  Railr.  >ad  Companv,  headed  by  Hlair 
and  D-.'dge.  !>oth.  <;i  1851,  obtained  charters  from  the 
Xew  [ersev  I  e'>i-latr.re  within  ;  few  da\>  of  each 


io6 


other's  grant.  In  those  years  scandal  after  scandal  wa^ 
developed  in  successive  Xe\v  Jersey  legislatures;  it  \va> 
no  secret  that  the  railroad  magnates  not  only  debauched 
the  Legislature  and  the  common  councils  of  the  citie- 
with  bribes,  but  regularly,  in  true  business-like  style, 
corrupted  the  elections  of  the  State.  In  1851,  for  in- 
stance, the  only  candidates  balloted  for  by  the  Legislature 
for  the  post  of  United  States  Senator  were  rival  rail- 
road nabobs  ;  the  very  same  men  who,  it  was  notorious 
had  for  years  been  bribing  and  corrupting. 

Which  of  the  two  sets  would  succeed  in  building  it- 
railroad  extension  first  ?  The  Legislature  had  accommo- 
dated both  with  charters  for  the  same  route:  in  that  re- 
spect they  were  on  an  equal  footing.  Hut  Blair  and 
Dodge  completely  outwitted  the  Morris  and  Essex  set. 
and  went  on  to  claim  prior  rights  for  their  lines.  '1  he 
Morris  and  Hssex  Railroad  Company  charged  fraud  and 
went  hotfooted  into  court  after  an  injunction,  which 
temporarily  it  obtained.  The  case  came  up  for  final 
adjudication  in  the  New  Jersey  Court  of  Chancery  in 
1854.  The  Morris  and  Essex  group  asserted  that  thev 
had  bought  the  right  of  way  through  the  Van  Xess  Gap, 
and  charged  Blair  with  taking  fraudulent  possession  of 
these  lands  for  the  purpose  of  ''  fraudulently  frustrating 
the  complainants  in  the  extension  of  their  road":  tha: 
the  survey  made  by  Blair  and  Dodge  was  fraudulent. 
and  that  there  were  other  frauds.  In  his  answer  Blaiv 
put  in  a  general  denial,  although  he  admitted  that  tli  • 
Morris  and  Essex  Railroad  Company  had  bought  the 

I    and    received    deeds    for    it.   but    averred    that    thi 
Junk  place  after  the  lands  had  been  conveved  to  the  \V;<: 
ren    Railroad    (  umpany.     Each    side   charged    tlu    nth  ••• 
\\itli  fraud:  undoubtedly  the  a-sertions  of  both  were  cor- 


Till:    iiL.UK'     AND    GAKUMTT    FOU  '1  I"  N  MS  1O7 

rect.  Judge  Green  decided  in  favor  of  Blair  and  dis- 
solved the  injunction.-  Subsequently  the  Warren  rail- 
road was  unloaded  upon  the  D.,  L.  &  \Y.  at  a  great 
profit. 

CHARGES    OF    JOl'.IiERY    AND    GRAFTING. 

At  first,  the  relations  among  Blair,  the  Phelpses  and 
Dodge  must  have  been  of  that  brotherly  unity  springing 
from  the  satisfactory  apportioning  of  good  things.  Pre- 
vious to  1856,  the  annual  reports  of  the  board  of  mana- 
gers of  the  Delaware,  Lackawanna  and  \Yestern  Rail- 
road Company  breathed  the  most  splendid  harmony, 
with  never  a  ripple  of  discord.  As  president  of  the 
company,  Phelps  had  appointed  Blair  the  land  agent 
for  the  Warren  division  of  the  railroad.3  Very  evi- 
dentlv  a  joyous,  comfortable  spirit  of  satisfaction  with 
the  way  things  were  progressing  pervaded  this  stalwart 
group  of  worthies. 

Suddenly  the  tenor  of  their  private  and  public  com- 
munications changed.  Peppery  statements,  growing  into 
broadsides,  were  issued,  filled  with  charges  and  coun- 
ter charges,  and  a  caustic  quarrel  set  in  over  the 
question  of  graft,  especially  in  connection  with  the  \Yar- 
ren  railroad.  On  September  <),  1856,  Phelps  resigned 
from  the  pre.-idcncv.  and  in  doing  so,  practicallv  charged 
others  of  the  directors  with  carrving  on  a  profuse  sys- 

-  Nc\v  Jersey    Kqir.ty    Reports,  ix  :  635-049. 

The  chief  owner  of  the  Morris  ai:«l  F.ssex  Railroad  wa?  Ed- 
'.vard  A.  S'cvei.^  \vlio.  for  many  year-,  blackmailed  a  0"nipeiiii;j 
lire,  the  Xe\v  J;-i>oy  Tran.-portali<>n  Company,  and  \vho,  \vhcn 
that  company  fnaliy  refused  to  continue  to  pay  Hackniai!, 
bribed,  it  \vas  charycd,  the  Xe\v  Jersey  f.epislatnrc  to  pass  rc- 

ry    inca-n-i  - .-     See    (.'liaj.ur    \:i    oi    present    volinne. 
"Second    Anr.r:  1    Report    of   the    Board   of   Alanat^rs   of  tlv 
Delaware.  Laekauan:ia  ur,d  \Vesu-rn  Rai'n\';ifl  Comj  anv,   185^'':^. 


IO8         HISTORY    OF    Till-:    GRliAT    AA1ER1CAX    1'OKTL'MiS 

tern  of  grafting  in  the  purchase  of  land,   supplies  and 
branch  lines. 

Did  Phelps  resign  as  a  protest?  More  probably,  the 
actual  situation  was  that  the  internal  fight  sprang  up 
over  difficult}'  in  adjusting  the  division  of  the  spoils, 
and  the  anti-Phelps  faction  had  proved  itself  the 
stronger.  Phelps  set  forth  his  case  in  published  confi- 
dential statements  accompanying  the  annual  reports.  He 
boasted  that  after  the  franchises  of  the  Delaware,  Lack- 
awanna  and  Western  Railroad  had  been  forfeited  for 
non-compliance,  that  it  was  he  who  had  got  through 
an  act  on  April  2,  1885,  "  restoring  all  franchises  and 
granting  other  important  privileges."  He  complained 
of  the  exorbitant  expenditures  the  directors  were  mak- 
ing, and  significantly  pointed  out  that  when  he  had 
wanted  to  get  an  auditor,  Blair  and  other  directors  re- 
fused to  vote  for  one.  Referring  to  the  process  of 
graft  Phelps  wrote  that  "one  of  our  managers  [BlairJ 
is  a  director  and  large  stockholder  in  the  Lackawanna 
iron  and  Coal  Company;  one-eighth  owner  in  the  Lehigh 
and  Tobyanna  Land  Company  ;  largely  interested  in  real 
estate  along  the  line  of  the  road  and  president  of  the 
Warren  railroad,  of  which  his  son  is  a  principal  contrac- 
tor. Another  son  is  director  and  very  large  owner  in 
the  Lackawanna  Iron  and  Coal  Company,''  etc.4  In 
another  confidential  circular,  dated  January  17,  1857, 
! 'helps  criticized  Blair  as  "one  of  the  parties  more  par- 
ticularly referred  to  "  and  as  "  systematically  opposed 
to  my  measures."  If  this  much  came  out  in  cold  type, 
what  must  have  been  the  whole  story?  The  frag- 
mentary visions  we  get  in  lhe>e  reports  are  undon  ksdly 


but  an  index  In  the  elaborate  miscellanies  of  graft  carried 
on  by  .Blair  in  every  available  direction.5 

P.LAIR'S  RAILROADS  i.\  THE  WEST. 

Blair's  loot  in  tbese  transactions  appears  to  have  been 
very  large.  His  operations  were  so  successful  that  he 
went  into  railroad  founding  as  a  regular  pursuit ;  and, 
as  did  Sage,  he  combined  professional  politics  and  busi- 
ness. His  greatest  opportunities  came  when  the  Union 
Pacific  and  other  railroad  charters,  subsidies  and  land 
grants  were  bribed  through  Congress. 

"  In  the  early  days  of  the  settlement  of  the  great 
West,"  wrote  one  of  his  puffers,  "  Mr.  Blair  found  am- 
ple opportunity  for  the  exercise  of  his  rare  judgment 
and  untiring  energy,  and  his  name  was  connected,  either 
as  a  builder  or  director,  with  not  less  than  twenty-five 
different  lines."  What  a  symmetrical  and  appealing  de- 
scription !  All  that  it  lacks  to  complete  it  are  certain 
trivial  details,  which  will  here  be  supplied. 

As  one  of  the  original  directors  of  the  Union  Pacific 
Railroad,  Blair  shared  in  its  continuous  and  stupendous 
frauds.  But  it  was  in  Jowa.that  he  plundered  the  most 
of  his  tens  of  millions  —  Iowa  with  its  fine  pristine  agri- 
cultural lands,  among  the  richest  in  the  United  States. 

^  Grossly  pliable  as  the  law  has  been,  where  capitalist  inter- 
ests have  been  concerned,  nevertheless  the  law  has  Ions?  professed 
tu  recognize  the  fundamental  principle  that  it  was  against  pub- 
lic policy  to  let  contracts  for  the  construction  of  a  railroad  to 
a  director  or  officer  of  the  company.  "All  such  contracts,"  says 
Elliott,  "are  regarded  with  keen  suspicion,  and,  at  least  in  the 
absence  of  good  taith,  are  voidable,  or,  according  to  some  au- 
thorities, void,  upon  the  clearest  principles  of  public  policy." 
(  See  Elliott  on  Railroads,  ii  :  830-840  )  This  sounds  well  in 
theory,  but  in  practice  the  courts  have  invariably  found  grounds 
to  sanction  these  framK 


IIO         HISTORY    OK    Till-:    OKI-;  AT    AMKRICAX     KORTUXKS 

\\'hilc  Sage  was  busily  engaged  in  thefts  and  expropria- 
tions in  "Wisconsin  and  Minnesota,  he  was  also,  as  was 
Blair,  pursuing  precisely  the  same  methods  in  Iowa. 
There  was  the  same  bribery  of  Congress  and  of  Legis- 
lature ;  the  same  story  of  immense  subsidies  and  land 
grants  corruptly  secured;6  the  same  outcome  of  thiev- 
ing- construction  companies,  looted  railroads,  the  cheat- 
ing of  investors,  bankruptcies  and  fraudulent  receiver- 
ships. Not  less  than  $50.000.000  in  subsidies  in  one 
form  or  another  were  obtained  by  the  railway  com- 
panies in  Iowa;  their  land  grants  reached  almost  5,000,- 
ooo  acres.  In  the  projection  of  the  railroads  in  that 
State,  Blair  was  the  predominating  —  almost,  excepting 
Sage,  the  exclusive  —  figure  ;  he  seemed  to  direct  every- 
thing; and  he  certainly  allowed  no  one  else  to  pocket 
what  he  could  yet  awav  with  himself. 


One  of  a  number  of  his  railroads  was  the  Sioux  City 
and  Pacific  —  a  line  with  a  very  ambitious  name  but  of 
modest  length.  Its  charter,  subsidies  and  land  grant 
were  obtained  by  Blair  at  the  auspicious  and  precise  time 

fl  "  The  first  land  grants  made  by  Congress,"  wrote  Governor 
J.  G.  Xewbold  of  Iowa,  in  his  annual  message  in  1878,  "were 
turned  over  to  the  companies  absolutely,  although  the  act  of 
Congress  contemplated  the  .-ale  of  the  lands  by  the  State  as 
earned,  and  the  devotion  of  the  proceeds  to  the  construction  of 
the  railroads;  the  companies  uere  permitted  to  select  the  lands 
regardless  of  their  line  of  road;  and  they  were  allowed,  virtu 
ally,  their  own  time  to  complete  the  work,  notwithstanding  that 
one  main  object  of  the  grams  was  to  secure  this  completion  at  an 


THK    HI. AIR    AXI)    GAKKKTT     I-'oKTI    N  KS  Til 

when  the  I'tiion  Pacific  measures  were  passed  1>v  hrib- 
erv. 

Whether,  however,  lilair  used  money  in  corrupting 
Congress  is  not  to  be  determined  from  the  official  rec- 
ords. Hut  if  he  did  not,  he,  at  any  rate,  employed  an 
wen  more  subtle  and  effective  mode  of  corruption.  The 
Congressional  investigations  reveal  that  it  was  his  system 
to  debauch  members  of  Congress  with  gifts  of  stock 
in  his  corporations;7  these  honorable  members,  of 
course,  mightily  protested  that  they  had  paid  for  it,  but 
nobody  believed  their  excuses.  Poor's  Railroad  Manual 
for  1872-73  additionally  reveals  that  among  the  direc- 
tors and  stockholders  of  Blair's  railroads  were  some  of 
the  identical  members  of  Congress,  both  of  the  House 
and  Senate,  who  had  advocated  and  voted  for  the  char- 
ters, subsidies  and  land  grants  for  these  railroads. 

For  the  Sioux  City  and  Pacific  Railroad  Blair  secured 
a  land  grant  of  one  hundred  sections,  and  .$16,000  of 
Government  bonds,  for  each  mile  of  railroad.  What 
happened  next  ?  Act  two  was  the  organization  of  a 

7  See  Credit  Mobilier  Reports.  These  are  full  of  testimony 
attesting  the  buying  up  of  members  of  Congress  by  this  method. 

His  chief  accomplices  in  this  work  in  Congress  were  William 
B.  Allison  and  (Jakes  Ames.  As  Representative,  and  later 
I'nited  Stales  Senator,  from  fowa,  Allison  was  long  a  powerful 
Republican  politician.  Ames  (as  \vc  have  seen)  was  one  of  the 
principal  originators  and  manipulators  ot  the  great  Credit 
Mobilier  swindle  (see  Chapter  xii.  Vol.  ii).  The  fact  that  Alli- 
son and  Ames  were  both  officers  of  the  Sioux  City  and  Pacific 
Railroad  Company  at  the  same  time  that  they  were  members 
of  Congress  was  well  known  before  the  act  of  1868  was  passed. 
On  December  15,  1X07,  Blair  certified  to  Hugh  McCulloch, 
United  States  Secretary  of  the  Treasury,  that  the  following 
officers  of  the  company  had  been  elected  on  August  7,  18(17: 
John  T.  Blair,  president;  William  15.  Allison,  vice-president; 
John  M.  S.  William-  of  Boston,  treasurer,  etc.  The  Executive. 
Committee  elected  on  thai  date  \vas  composed  of  Blair.  AUK-, 
Charles  A.  Lambard,  D.  C.  Blair,  and  William  B.  Allison.— See 
Kx.  Documents.  Xos.  iSi  to  252,  Second  Session,  Fortieth  Con- 
yresS,  18(17-68,  Doc.  Xo.  .03. 


112         HISTORY    OK    TIIK    GKKAT    AMERICAN    FORTUNES 

construction  company  modeled  on  exactly  the  same  lines 
as  the  Credit  Alobilier.  As  the  head  of  this  company, 
I '.lair  extorted  large  sums  for  building  the  railroad. 
On  the  prairies  of  Iowa,  with  almost  no  grading  neces- 
sary, railroad  building  called  for  comparatively  little  ex- 
penditure. Expert  testimony  before  the  Pacific  Railroad 
Commission,  in  1887.  estimated  that  the  road  could  have 
been  built  at  a  cost  of  $2,600,000,  with  the  supple- 
mentary statement  (and  what  a  commentary  it  formed 
upon  the  business  standards  of  the  times!)  that  if  hon- 
estly done  the  entire  cost  ought  not  to  have  exceeded 
$1,000,000. 

A    LITTLE    ITEM    OF    A    $4,OOO,OOO    THEFT. 

What  did  Blair's  company  (which  was  mainly  himself 
and  his  sons)  charge?  It  awarded  itself  $49,865  a  mile, 
or  a  total  of  more  than  $5,000,000.  Then  having  bled 
the  railroad  into  insolvency,  Blair  enriched  himself  fur- 
ther by  selling  it  to  the  Chicago  and  Northwestern  Rail- 
road Company.  Jf  there  be  any  doubt  of  the  cool  delib- 
eration with  which  those  "  eminent  capitalists  "  set  out 
to  swindle  the  Government,  it  must,  perforce,  be  dissi- 
pated by  consideration  of  the  following  fact:  "When 
the  negotiations  were  pending  for  the  transfer  of  the 
stock  of  the  Sioux  City  and  Pacific  Railroad  Company 
to  the  Chicago  and  Northwestern,"  reads  the  report  of 
the  Pacific  Railroad  Commission,  ''John  T.  Blair  offered 
a  resolution,  which  appears  on  the  minutes,  setting  forth 
that  the  Chicago  and  Northwestern  must  bind  itself  to 
protect  every  obligation  of  the  companv  except  that  to 
the  United  States  Government."8  This  was  ^  refresh- 
ing! v  candid  wav  of  arransjincr  swindles  in  advance. 


THK    m.AlK    AM)    (1AKRKTT    FORTl'NKS  L  J  ^ 

And,  in  fact,  the  final  swindling  of  the  Government  oi 
much  of  the  funds  that  it  had  advanced  was  accom- 
plished in  1900.  By  an  act  then  lobbied  tli rough  Con- 
gress, the  company  was  virtually  released  from  pa  vim; 
back  more  than  one-tenth  of  the  sum  it  still  owed  the 
Government. '•' 

AXOTIIF.R     RAILROAD     Pr.fNDERF.D. 

But  Blair's  frauds  in  the  inception  and  construction 
of  the  Sioux  City  and  Pacific  and  some  of  his  other 
roads  were  surpassed  —  in  degree,  at  least  —  by  those  he 
put  through  in  another  of  his  Iowa  railroad  projects  — 
the  Dubuque  and  Sioux  City  line.  The  charter  and  land 
grants  of  this  railroad,  and  those  of  the  Iowa  Falls  and 
Sioux  City  Railroad,  were  given  by  an  act  passed  by 
Congress  on  May  15,  1856.  \Ye  have  seen  what  indis- 
criminate corruption  was  going  on  in  Congress  in  1856 
and  accompanying  years ;  how  the  Des  Moines  River 
and  Navigation  Company's  land  grant  was  obtained  by 
briber}',  and  how  committees  were  reporting  the  ex- 
istence of  corrupt  combinations  in  Congress.  There  is 
no  definite  official  evidence  that  the  charter  and  land 
grants  of  the  Dubuque  and  Sioux  City  Railroad  Com- 
pany and  those  of  the  Iowa  Falls  and  Sioux  City  were 
secured  bv  bribery,  but  judging  by  the  collateral  circum- 
stances attending  the  passage  of  other  bills  at  the  same 
time,  the  probabilities  are  strong  that  they  were.  l>y 
the  act  of  1856  these  two  companies  received  as  a  gift 
about  i  .200,000  acres  of  public  land  in  Iowa.10  Despite 

"Allison,  who,  as  a  prominent  member  of  the  House,  had 
been  implicated  in  Illair's  briberies  nearly  forty  years  before, 
was  now  nne  of  the  leaders  in  the  United  States  Senate.  This 
was  the  man  at  whose  death  the  newspapers  eulogized  as  a 
"great  constructive  statesman." 

"'The  aet   of   May    r;,    iS;o,  gave  a  total  of   1.233,4X1.70  aeres 


this  lavish  present,  the  incorporators  made  little  or  no 
attempt  to  build  the  entire  railroad  ;  they  occupied  them- 
selves almost  solely  with  stockjobbing,  and  with  the 
business  of  profitably  disposing  of  the  land  to  settlers. 
Congress  was  compelled  under  pressure  of  public  opin- 
i"ii  to  forfeit  much  of  their  land  grant. 


CORRUPTING    OF    CONGRESS. 

Blair  >aw  what  glorious  opportunities  had  been  lost 
by  the  act  of  forfeiture.  But  the  mischief  could  be 
undone.  If  one  set  of  capitalists  were  obtuse  enough 
not  to  know  how  a  restoration  could  be  brought  about. 
he  knew.  So  he  came  forward,  took  up  the  companies 
as  his  own.  and  applied  to  Congress  and  to  the  Legisla- 
ture of  Iowa  for  a  re-umption  of  the  rights  and  grants 
of  which  the\-  had  been  shorn. 

He  succeeded;  both  Congress  and  the  Iowa  Legis- 
lature passed  acts  in  1868  restoring  the  rights  and  land 
grant.  How  came  it  that  he  encountered  no  obstacle- 
in  his  plan?  \\  by  were  these  legislative  bodies  so  tract- 
abler  Of  course,  they  could  plead  that  they  simply 
acted  in  deference  to  memorials  from  the  citizens  of 
Iowa ;  but  memorials  were  transparent  affairs,  easily 
manufactured.  And  the  "  \\  ilson  Committee  "  {  tin- 
Credit  Mobilier  Investigation)  of  1872  could  make  it- 
whitewashing  report  that  "  no  evidence  could  be  found  " 
of  money  having  been  Used  for  "improper  purposes." 

to  tht-  Dubuque  and  Sioux  City  Railroad  Company  and  the 
I  own  Falls  and  Sioux  City  Railroad  Company.  By  the  same 
act  the  Iowa  Central  Air  Line  and  the  Cedar  Rapids  and  Mi- 
-ouri  River  Railroad  Company  received  a  total  of  783,096.33 
acre-,  supplement!. d  by  347.317.64  acres  by  act  of  June  2.  1864. 
The  acts  of  May  15,  1850,  and  June  j,  1804,  al>o  gave  extensive 
'and  .a rants  to  the  Chicago.  Rock  Island  and  Pacific  Railroad 
Company. 


Till-:    IJLA1K    AM)    GAKKETT    FORT L  N  MS  115 

either  in  Congress  or  in  the  Iowa  Legislature.  But  the 
testimony  before  this  very  committee  flatly  contra- 
dicted its  conclusions.  It  was  revealed  that  a  whole 
string  of  conspicuous  members  of  Congress  had  suddenly 
become  large  stockholders  in  the  Dubuque  and  Sioux 
City  Railroad.1011  Upon  getting  the  restoration  of  the 
land  grant,  Blair  organized  a  construction  company, 
called  the  Sioux  City  Railroad  Contracting  Company,  and 
by  the  usual  cumulative  system  of  frauds  in  construc- 
tion work,  made  immense  "  profits,''  reaching  many  mil- 
lions of  dollars.  Some  of  the  railroads  that  Blair  plun- 
dered are  now  parts  of  the  Illinois  Central  system,  of 
which  Harriman  became  dictator. 

It  must  not  be  thought,  however,  that  outright  bribery 
was  always  resorted  to  in  order  to  secure  subsidies,  'spe- 
cial rights  and  immunities.  In  the  first  stages  of  rail- 
road history  direct  bribery  was  the  usual  means;  but  as 
time  wore  on.  the  passing  of  monty  in  direct  forms 
became  less  frequent,  and  a  less  crude,  finer  and  more 
insidious  system  of  bribery  was  generally  substituted. 
The  Western  magnates  began  to  follow  the  advice  of 
that  Eastern  magnate  who  declared  that  it  was  easier  to 
elect,  than  to  buy.  a  legislature. 


The  newer  system  as  it  was  carried  on  in  Iowa  and 
uther  states  was  succinctly  described  in  1805  by  William 
Larrabee,  erstwhile  Governor  of  Towa.  "  Outright  brib- 
er}-." he  wrote,  with  a  long  and  keen  knowledge  of  the 
facts. 


lib 

-  pribably  the  means  lo;<s!  often  employed  by  corporation-  i., 
carry  their  measures.  ...  It  is  the  policy  of  the  political 
•  .rruption  committees  of  corporations  to  ascertain  the  weak- 
ness and  wants  of  every  man  whose  -ervices  they  arc  likely  to 
need,  and  to  attack  him,  if  his  surrender  -hould  be  essential 
to  their  victory,  at  his  weakest  point.  Men  with  political  am- 
bition are  encouraged  to  aspire  to  preferment,  and  are  assured 
of  corporate  support  to  bring  it  about.  Briefless  lawyers  are 
promised  corporate  business  or  salaried  attorneyships.  Those 
in  financial  straits  are  accommodated  with  loan-.  Vain  men 
are  flattered  and  given  new-paper  notoriety.  Others  are  given 
passes  for  their  families  and  their  friends.  Shippers  are  given 
advantages  in  rates  over  their  competitors.  The  idea  is  that 
every  legislator  shall  receive  for  his  vote  and  influence  some 
compensation  which  combines  the  maximum  of  desirability  to 
him  with  the  minimum  of  violence  to  his  self-respect.  .  .  . 
The  lobby  which  represents  the  railroad  companies  at  legisla- 
tive sessions  i:-  u-na'.ly  the  large-t,  the  most  sagacious  and 
the  mo.-t  unscrupulous  of  all.  In  extreme  cases  influential 
constituents  of  doubtful  members  are  sent  for  at  the  last  mo- 
ment to  labor  with  their  representatives,  and  to  assure  them 
that  the  sentiment  of  their  districts  is  in  favor  of  the  measure 
advocated  by  the  railroad:-.  .  Telegrams  pour  in  upon  the  unsus- 
pecting member.-.  Petitions  in  favor  of  the  propo.-ed  measure 
are  also  hastily  circulated  among  the  more  unsophisticated  con- 
stituents of  members  sensitive  to  public  opinion,  and  are  then 
presented  to  them  as  an  unmistakable  indication  of  the  popu- 
lar will Another  powerful  reinforcement  of  the  rail- 
road lobby  is  not  infrequently  a  subsidized  press  and  its  cor- 
r<  -pondent.-. 

I  hit  the  robbery  by  means  of  construction  companies 
hi-  numerous  railroad  projects  formed  only  a  part  oi 
•  wealth  gra-ped  by  Plair.  One-eighth  of  the  entire 
d  main  of  the  richly  fertile  State  of  Iowa  wa-  granted 
to  railroad^,  most  of  which  i'dair  owned.  Thi-  reached 
an  area  almost  as  large  as  the  Slate  of  Massachusetts. 
Settler-  were  compelled  to  pav  an  exorbitant  price  for 
farm  land-,  and  very  often  were  tinder  mortgage  to  tr..- 
railroad  companies.  A  detailed  description  of  Pilair'.- 


methods  would  be  simply  a  repetition  of  those  described 
in  previous  chapters  in  the  case  of  other  magnates. 

I'Lill.A.XTIIKOI'Y    COMI'ARKD    WITH.     FACT. 

Although  incurably  stingy  in  personal  expenditures  — 
the  meanest  of  men  —  Blair  donated  just  enough  money 
to  procure  the  award  of  being  an  extremely  pious  phi- 
lanthropist. I  le  founded  one  hundred  churches  in  the 
West;  lie  established  a  Presbyterian  Academy  at  a  cost 
of  8150,000,  and  gave  several  hundred  thousand  more 
dollar.-,  to  the  Presbyterian  Church.  1'ut  what  were  the 
effects  of  his  frauds  and  oppressions  and  those  of  his 
successors  upon  the  very  people  to  whom  he  so  de- 
voutly contributed  pulpits  and  gospels?  Writing  of  the 
Iowa  railroads,  Dr.  Frank  II.  Dixon,  a  conservative 
writer,  says  : 

The  roads  had  it  in  their  power  lo  make  and  unmake  cities. 
In  de-troy  the  businesses  of  individuals,  or  to  force  their  re- 
moval to  favored  points.  'I  lie  people  were  quickly  up  in  arms 
against  this  policy.  The  flame  of  opposition  was  fanned  by 
the  hitter  feelings  aroused  through  absentee  owner-hip,  so 
prevalent  in  the  Western  States  at  this  time.  A  well-settled 
conviction  possessed  the  people  that  the  owner-  of  capital,  di- 
rccting  their  operations  ;';;  ahscnlui  and  through  intermediaries 
•d  their  interest  in  Western  affairs  to  the  amount  of  divi- 
d'  n'.Is  which  they  could  squeeze  from  the  shippers.11 

And,  of  course,  the  large  amounts  of  watered  stock, 
upon  which  these  dividends  had  to  be  paid,  were  i--ued 
to  cover  the  gigantic  fraud-  of  the  railroad  constructors 
and  of  succeeding  groups  of  manipulators. 

This,  in  outline,  was  the  course  of  Blair,  so  eminent 
and  exalted  a  capilali-t;  here  i-  rut  elucidation  of  the 


Il8         HISTORY    01-    THE    GREAT    AMERICAN    FORTUNES 

line  textures  of  his  "  rare  business  instincts  " ;  and 
knowing  it,  the  mystery  of  where  his  sixty  or  ninety 
millions  came  from  is  quite  apparent,  if  not  entirely 
clear. 

What  Blair  and  others  were  doing  in  the  North  and 
West  before,  during,  and  after  the  Civil  \Yar,  John  \V. 
Garrett  and  Johns  Hopkins  were  doing  in  Maryland. 
Scarcely  referred  to  now.  Garrett  was  extolled  in  his  day 
as  a  "  famous  railroad  king " ;  and  in  this  case  it  is 
not  the  man  so  much  nor  the  Garrett  fortune  which 
commands  interest  as  is  the  story  of  the  railway  line 
that  he  and  Hopkins  largely  owned;  this  property  forms 
to-day  one  of  the  great  transportation  systems  of  the 
country. 


THE    BALTIMORE   AND   OHIO    1ST1ET   .BY   Pl'BLlC    MONEY. 

As  were  other  railroads,  the  Baltimore  and  Ohio  Rail- 
road was  built  almost  wholly  with  funds  granted  by 
State,  counties  and  municipalities.  In  1827  the  State 
of  Maryland  granted  a  subscription  of  8500.000  as  first 
aid,  and  the  city  of  Baltimore  the  same  sum.  At  the 
outset  the  projectors  lot  til  v  disclaimed  any  intention  ot 
asking  any  further  grants  of  public  aid;  private  capita!. 
said  they,  would  construct  the  road.  But  seven  year- 
later  they  made  another  inroad  upon  the  public  treasury; 
the  State  of  Maryland  was  induced  to  subscribe  $3,000,- 
ooo  more  in  1835.  and  the  city  of  Baltimore  $3.000.000 
in  fB^C).  In  1838  they  obtained  $1,000.000  from  the  city 
-  f  Wheeling.12  For  a  while  they  were  discreet  enough 
ui  refrain  fr^m  again  attacking  the  public  treasury;  but 

to    the    Balii- 
F,H.   1^4,  etc 


ll'J 

when,  in  1850,  they  applied  to  the  Common  Council  of 
Baltimore  for  $5,000,000  more,  and  obtained  die  amount, 
there  was  some  questioning"  as  to  what  had  become  of 
the  many  million.-,  contributed  from  the  public  ex- 
chequer. A  considerable  part,  it  was  evident,  had  been 
used  in  constructing  the  railroad,  but  opinions  were 
freely  expressed  that  the  directors  had  been  enriching 
themselves  by  the  customarv  grafting  device.--  of  the  day 
--such  as,  for  instance,  those  used  by  Blair  in  Xcw 
Jersey.  Pennsylvania  and  Xew  York. 

Whenever,  however,  opposition  to  additional  appro- 
priations sprang  up  and  embarrassing  questions  were 
asked,  the  director.--  would  have  their  glittering  arguments 
ready.  "  See  what  a  great  work  we  have  been  carrying 
on.  Is  this  not  an  enterprise  of  the  greatest  importance 
to  the  whole  community,  to  the  farmer,  the  mechanic 
and  the  business  man?  Now,  when  we  are  on  the  high 
road  to  completion,  shall  we  have  to  suspend  because  of 
lack  of  funds?  \Yould  not  this  be  a  great  public  ca- 
lamity? "  Such  arguments  told  with  the  public:  and  the 
legislatures  and  common  councils,  corruptly  influenced, 
could  always  base  their  explanations  upon  them. 


Plundered  by  the  original  cli<|ue.  the  Baltimore  and 
Ohio  Railroad  went  into  financial  ruin.  N'olwilhstand- 
mg  the  great  bounties  that  it  had  received,  it  was  in  a 
demoralized  condition  in  i-v>.  and  its  treasury  was 
emuiy.  Carrel  I  and  [  fopkin>,  who  hail  long  been  asso- 
<:  lei!  with  it  and  who  had  prohr.bly  shared  in  the  loot 


I2O 

rett  was  the  son  of  a  rich  shipping  merchant ;  Hopkins 
had  made  money  in  the  grocery  business. 

Garrett  and  Hopkins  not  only  continued  the  long  pre- 
vailing frauds,  but  put  through  many  other  fraudulent 
and  corrupt  acts.  Here,  for  example,  is  one  of  the 
-mailer  frauds:  The  millions  of  stock  subscriptions  do- 
nated by  the  State  of  Maryland  for  the  building  of  the 
Baltimore  and  Ohio  Railroad  had  been  to  a  large  ex- 
tent floated  in  London  among  British  capitalists.  The 
interest  had  to  be  paid  by  Maryland  to  these  financiers 
in  gold.  Did  the  company,  on  its  part,  reimburse  the 
State  in  coin?  By  no  means.  It  claimed,  by  force  of 
certain  judicial  decisions,  that  it  was  not  required  to  pay 
interest  to  the  State  otherwise  than  in  currency.  Un- 
der the  prevailing  money  conditions,  and  estimating  the 
difference  in  rates  of  exchange,  this  form  of  payment 
meant  a  constant  loss  to  the  State  of  Maryland  —  a  loss 
reaching  more  than  a  total' of  $400,000,  of  which  amount 
the  Baltimore  and  Ohio  cheated  the  State. 

Far  greater  were  the  amounts  of  which  the  State  of 
Maryland  was  cheated  in  the  fraudulent  manipulation 
of  what  was  called  the  \Yashmgton  Branch  of  the  Bal- 
timore and  Ohio  Railroad.  In  return  for  franchises 
and  aid.  the  company  agreed  to  pay  the  State  one-fifth 
of  the  pa->enger  receipts.  After  the  branch  was  in  suc- 
cessful operation,  its  treasury  was  constantly  represented 
as  so  -icklv  that  there  was  no  money  in  hand  with 
pay  the  State.  Time  after  time  inquiries  were 
honest  legislators  as  to  where  the  great  profits 
,  Xo  satisfactory  answer  was  ever  given:  the 
~  absolutely  rhealed  :  and,  finallv,  a  corrupt  act 
•••  :  prnrticallv  abandoning  all  of  iK.  -•••'«.' 


121 

and  C  )hio  Railroad  Company  caused  a  scries  of  measures 
to  be  passed  exceeding  in  corruption,  in  some  respects, 
those  put  through  by  Commodore  Yanderbilt  in  New 
York.  Repeatedly  the  legislatures  of  Maryland,  Vir- 
ginia, West  Virginia,  Pennsylvania  and  other  States,  and 
the  common  councils  of  many  cities,  were  bought  up. 
and  the  courts  were  thoroughly  subverted.  Franchises 
of  inestimable  value  were  given  away  ;  the  public  treas- 
ury was  cheated  out  of  the  sums  advanced,  and  was 
drawn  upon  to  pay  the  expense  of  improvements;  large 
stock  watering  issues  were  authorized,  and  the  company 
was  virtually  relieved  from  taxation.  By  1876  fully 
$88,000,000  of  its  property  went  untaxed. 

The  militant  object  of  Garrett  and  Hopkins  was  the 
destruction  of  the  Chesapeake  and  Ohio  Canal  as  a  com- 
petitor. As  Commodore  Yanderbilt  in  Xcw  York  found 
the  Erie  Canal  to  be  a  competitor  of  his  lines,  so  Gar- 
rett and  Hopkins  decided  that  they  could  not  get  a 
monopoly  of  transportation  in  Maryland  until  the  Ches- 
apeake and  Ohio  Canal  had  been  extinguished  as  a  com- 
petitor. The  obstacles  in  their  way  were  great,  for  the 
State  of  Maryland  had  expended  many  millions  of  pub- 
lic money  in  the  construction  of  the  canal,  and  owned 
it.  and  the  public  was  not  disposed  to  see  its  usefulness 
impaired.  This  was  especially  true  of  the  merchant 
class,  which  demanded  competition  and  insisted  that 
monopoly  would  be  ruinous. 

DKSTROVI'XC;    CANAL    COMPETITION. 

Beginning  in  1860,  Garrett  and  Hopkins  corrupted 
the  Maryland  Legislature,  until  by  one  act  piled  upon 
another,  they  were  gradually  able  to  wrest  away  its 
< '\\ner-hip  from  the  Stair.  P.ti!  they  did  not  merely  de- 


pcnd  upon  tlie  bribing  of  legislators  after  they  were  in 
office.  With  money  supplied  by  Garrett  and  Hopkins. 
the  political  bosses  of  .Maryland  engaged  in  packing 
of  primaries,  indiscriminate  bribery  of  voters  and  stuffing 
of  ballot  boxes,  thus  insuring  the  election  of  subservient 
official-.  Once  the  canal  was  practically  in  their  hands, 
(.jarrett  and  Hopkins  made  it  useless  as  a  competitor. 

Having  a  complete  monopoly  they  now  exacted  extor- 
tionate charges  for  transportation,  and  they  likewise 
increased  their  profits  bv  cutting  the  pay  of  their  em- 
ployes. In  desperation,  the  railroad  workers  declared  a 
strike  in  1877.  False  reports  of  the  violence  of  the 
strikers  were  immediately  dispatched  broadcast.  Using 
these  charges  as  a  pretext,  the  military  was  called  out. 
At  Martinsburg,  \V.  \"a..  the  State  militia  refused  to  lire 
upon  the  strikers,  but  a  company  of  militia,  recruited 
from  a  class  hostile  to  the  strikers,  opened  fire,  killing 
manv  of  the  strikers  and  wounding  others. 


Roth  (jarrett  and  Hopkins  extorted  out  large  sum> 
from  their  control  and  manipulations  of  the  Baltimore 
and  Ohio  Railroad.  Hopkins'  fortune,  at  his  death, 
amounted  to  nominally  Si 0.000,000.  At  the  time  of  hi- 
demise,  in  1^73.  he  was  "  the  wealthiest  citizen  of  Balti- 
more.'' The  most  clo-etisted  of  men.  he  relaxed  in  at 
least  one  respect  during  the  last  year  of  his  life.  Fol- 
lowing the  example  of  so  many  other  multimillionaires 
of  the  period,  he  made  certain  of  the  perpetuation  of  hi- 
memory  a<  a  "great  philanthropist."  To  this  end,  in 
March.  1^73,  he  gave  properly  valued  at  84.500.000  with 
which  to  found  a  ho-phal  in  Baltimore :  he  presented 
ith  a  public  park,  and  he  donated  $3,500,000 


Till':    ULAiK    AND    GAKKETT    FORTUNES  123 

as  an  initial  benefaction  for  the  founding  of  the  Johns 
Hopkins  University.  Here  it  is  pertinent  to  inquire 
what  was  the  form  of  property  given  in  these  bounties. 
Very  largely,  it  consisted  of  Baltimore  and  Ohio  Rail- 
road stock  ;  it  was  property  representing  the  corruption 
of  public  life,  the  abasement  of  the  workers  and  the  gen- 
eral spoliation  of  the  entire  community. 

And  what  was  Garrett' s  share  of  the  proceeds  of  the 
joint  control?  At  his  death,  in  1884,  it  was  said  to  be 
$15,000.000,  but  it  was  undoubtedly  much  more.  This 
wealth  descended  to  his  son  Robert,  who  went  through 
a  series  of  personal  excesses,  to  wind  up  in  melancholia 
and  softening  of  the  brain.  Obviously  enough,  he  was 
no  match  for  those  abler  capitalists,  the  Yanderbilts, 
Goulds  and  Scott ;  1:;  they  pounced  upon  him  and  ruth- 
lessly despoiled  him  as  his  father  had  despoiled  others ; 
his  autocratic  power  and  sway  gradually  vanished.  When 
he  died,  in  1896,  his  wealth  had  shrunk  to  about  $5,000,- 
ooo.  and  the  Baltimore  and  Ohio  system  had  passed 
under  the  control  of  the  Pennsylvania  railroad  group  of 
magnates. 

Ki  A  current  siory,  frequently  published,  was  to  this  effect: 
That  Robert  Garrett  had  secretly  consummated  negotiations  for 
the  purchase  of  the  Philadelphia,  Wilmington  and  Baltimore 
Railroad,  and  the  night  before  the  final  arrangements  were  to 
be  made  invited  a  friend  to  celebrate  the  occasion.  When 
bibulous  from  champagne,  (iarrctt  revealed  the  secret.  The  friend 
excused  himself,  went  immediately  to  Scott,  of  the  Pennsylvania 
Railroad,  and  informed  that  magnate.  Scott  at  once  filled  a 
satchel  full  of  bonds,  and  hurried  away  to  make  an  offer  to  the 
capitalists  controlling  the  Philadelphia.  Wilmington  and  Balti- 
more Railroad,  outbid  Garrett,  and  had  secured  the  ownership 
of  that  railroad  for  the  Pennsylvania  system  almost  before  Gar- 
rett had  awakened  from  his  drunken  stupor. 


CHAPTER  VI 
THE  PACIFIC  QUARTET 

During  the  range  of  years  when  the  Yanderbilts, 
Gould,  Sage,  Blair  and  various  other  railroad  magnates 
were  hurling  themselves  upward  into  the  realms  of  mas- 
terful wealth,  four  other  noted  capitalists  whose  careers 
were  interjoined,  were  doing  likewise  in  the  Far  \Yest. 

This  group  was  o  imposed  of  Collis  P.  Huntington, 
Leland  Stanford,  Charles  Crocker  and  Mark  Hopkins. 
It  was  an  unusual  brotherhood  in  that,  for  a  long  time, 
they  hung  together  with  a  tenacious  fidelity  not  often 
found  among  railroad  capitalists.  In  fact,  it  was  so  rare 
a  phenomenon  that  the  mention  of  it  deserves  a  place  of 
supreme  precedence.  Such  magnates  as  Commodore 
Yanderbilt  and  William  H.  Yanderbilt,  Gould  and  Sage, 
preferred  to  go  it  alone,  not  merely  satisfied  with  the 
lion's  share,  but  determined  to  bag  it  all.  if  they  could; 
they  were  disirustful  and  intolerant  of  partners  except 
as  expediency  demanded,  and  then  they  acted  with  them 
only  to  fleece  them  eventually.  The  Pacific  quartet  were 
also  starkly  individualistic,  each  for  himself,  but  they 
moderated  their  propensities  enough  to  fuse  their 
interests  in  a  common  harmony  of  aim.  Even  more: 
they  >agaciously  weighed  the  >pecial  fitness  of  each,  as- 
signed tlie  duties  according  to  this 
mem.  and  divided  the  >poil<  with 
fairness. 

124 


COLLIS  P.  HUNTINGTON. 


TI1K    PACIFIC    <Ji:. \UTET  125 

So  far  as  railroad  magnate.-.-,  were  concerned,  this  was 
a  remarkable  feature  of  their  lime. 


FOUR    MEN     WHO    COl/LD    ACT    TOGETHER. 

In  fine,  this  group  was  distinguished  by  a  method  of 
intelligent  cooperation.  To  this  fact  \vas  due,  in  a 
measure,  their  rapid  success  in  obtaining  great  wealth 
without  the  necessity  of  dragging  through  intermediate 
stages.  They  were  among  the  first  of  the  magnates  to 
prove  the  superiority  of  the  principle  of  systematic 
organization  —  a  lesson  which  the  Standard  Oil  group 
took  up  a  little  later,  amplified,  improved,  and  developed 
into  a  superfine  system.  Mere  was  not  a  case  of  where 
one  man  doniinatingly  insisted  that  he  alone  was  en- 
dowed with  all  of  the  functions  required  in  successful 
business.  The  Pacific  quartet  recognized  the  value  of 
specialization.  In  a  general  way,  Huntington  was  in- 
trusted with  the  supervision  of  the  financial  affairs : 
Stanford  of  the  plans  for  the  manipulation  of  law  and 
politics  ;  Crocker  was  placed  in  charge  of  the  construc- 
tion work,  and  Hopkins  was  the  commandant  of  office 
details.  The  particular  useful  qualifications  of  each  of 
the  four  were  mutually  appreciated  and  availed  of.  [n 
addition  to  this  divi>ion  of  overseership,  all  joined  to- 
gether as  a  unit  in  the  promotion  and  consummation  of 
their  plans. 

Circumstances  did  not  compel  these  four  men  to  be 
:>f  quite  the  same  revolutionary  type  of  capitalists  as  the 
Yanderbilts  and  ( loulds.  They  did  not  have  to  do  much 
pummeling  of  smaller  capitalists,  nor  expend  much  effort 
in  beating  down  the  sacred  doctrine  of  "  free  and  unre- 
stricted competition."  Their  territory  was  largely  one 


v.  Irich  had  not  been  taken  up  by  companies  of  small  cap- 
italists, building  in  piecemeal  fashion.  They  had  the 
opportunity  of  bringing  forth  great  railroad  systems  out 
of  what  had  been  a  void.  At  a  bound  they  sprang  from 
an  obscure  position  to  that  of  great  capitalists;  the 
transformation  from  petty  dealers  in  merchandise  or  law 
to  multimillionaires  was  a  quick,  sudden  one.  Within  a 
lew  years  thev  took  their  place  among  the  industrial  dic- 
tators of  flic  United  States;  owners  of  great  railroad 
and  steamship  lines  and  of  many  other  forms  of  prop- 
erty, and  of  an  immense  domain  of  land  —  not  less  than 
30,000,000  acres  in  all.  All  of  these  men  have  passed 
away,  but  the  wealth  that  they  became  possessed  of  re- 
mains ;  and  even  if  their  personal  careers  are  of  no  lin- 
gering interest,  their  fortunes  are  still  active,  and  the 
history  of  their  properties  is  of  very  pertinent  present 
importance. 

TIIF.Y    BKGIX     \VITJI     SCAXT    CAPITAL. 

All  four  had  migrated  from  the  Hast  to  California 
after  the  discovery  of  gold  on  the  Pacific  Coast.  There 
Iluntington  carried  on  a  hardware  and  miners' 
supply  store  at  Sacramento,  and  Hopkins  became  his 
partner;  Crocker  was  likewise  a  small  merchant,  and 
Stanford  was  a  lawyer.  The  four  were  not  able  to 
scrape  together  a  pool  of  more  than  an  insignificant  sum 
with  which  to  execute  what  was  then  considered  one  ol 
the  greatest  and  most  difficult  railroad  projects  of  modern 
times. 

The  phrase  monger  is  addicted  to  rhapsodizing  upon 
the  marvelous  self-confidence  which  could  initiate  a  huge 
railroad  line  with  only  a  trivial  sum  as  a  starter.  This 
may  be  a  romantic  \vav  of  describing  their  prowess  and 


Till-".    I'ACli'IC    OUAKTF.T  1  2/ 

ingenuity.  But  neither  was  the  project  itself  of  their 
conception,  nor  did  they  have  to  supply  the  funds. 
Years  before  they  took  hold  of  the  work  as  a  definite 
undertaking,  the  building  of  Pacific  lines  had  been  agi- 
tated and  urged,  and  the  Government  had  surveyed  feasi- 
ble routes.1  Not  one  of  the  quartet  knew  anything  of 
railroad  construction,  nor  had  the  least  fundamental 
knowledge  of  how  to  equip  and  operate  a  railroad. 

In  what  direction,  then,  lay  their  ability?  Purely  and 
wholly  in  the  line  of  promoting.  The  capitalist  system 
was  of  such  a  fantastically  inverted  nature  that  to  grasp 
the  ownership  of  anything  did  not  imply  or  require  the 
ability  of  supervision.  Railroads,  factories,  mines  and 
public  utility  systems  were  generally  owned  by  men  — 
otten  bv  absentees  —  who  knew  nothing  of  any  aspect  ol 
them  except  the  one  all-important  phase  —  the  budget  of 
profit  or  loss. 

The  ability  of  the  promoter  was  the  most  necessary 
consideration,  although  not  the  foremost  in  insuring  the 
title  of  ownership.  Very  frequently,  in  the  case  of  fac- 
tories and  mines,  promoters  had  to  get  funds  from  bank- 
ing houses,  which  usually,  by  skillful  law  work,  suc- 
ceeded in  getting  those  promoters  into  a  legal  snare,  forc- 
ing them  out.  and  expropriating  their  property.  Rail- 
road promoters,  however,  did  not  have  to  depend  so 
much  upon  private  bankers.  They  could  draw  upon 
Government,  State  and  cities  for  advances  of  money. 
If  a  man,  or  a  >et  of  men.  could  succeed  in  bribing  Con- 
gress and  the  legislatures  to  donate  land  grants  and  ad- 
\  ance  the  funds,  it  was  a  very  simple  matter  to  hire 
highly  competent  civil  engineers  to  survey  and  build  the 


routes,   and   employ   good   executives   to   run   them 
they  were  built. 

The  first  and  prime  necessity  was  the  purchase  of  legis- 
lation with  its  corollaries  —  franchises,  gifts  and  free 
access  to  the  public  treasuries.  This  done,  the  remain- 
der of  the  program  was  easy.  In  this  regard  it  was 
that  Huntington  and  his  partners  showed  their  finesse  — 
not  an  unusual  finesse,  by  any  means ;  its  caliber  was 
neither  more  nor  less  than  that  of  many  another  capi- 
talist, who  also  had  been  adroit  in  bribing  legislation 
through. 

L'pon  organizing  the  Central  Pacific  Railroad  Company 
in  i8(')i,  the  Huntington  group  could  not  privately  raise 
more  than  about  $1(^5.000.  of  which  amount  they,  them- 
selves, put  in  about  $50.000.  This  sum.  ridiculously 
inadequate  to  build  a  railroad  estimated  to  cost  $25.000.- 
ooo,  was,  however,  enough  and  more  than  enough,  for 
certain  well-understood  primary  operations. 

With  it  expenses  could  be  defrayed  at  the  centers  of 
legislation:  petitions  and  memorials  concocted;  advo- 
cates paid,  and  newspapers  subsidized.  If  the  trick  were 
well  turned,  a  whole  succession  of  franchises,  special 
laws,  land  grants  and  money  subsidies  would  follow. 
Thus  we  see  that  the  original  capital  needed  in  many  cap- 
italist enterprises  was  not  for  the  actual  prosecution  of 
the  work,  but  for  the  purpose  of  bribery.  In  fact, 
money,  as  an  absolute  requirement,  could  be  dispensed 
with.  For  their  vote-,  legislators  (being  wily,  tactful 
and  practical  men  )  much  preferred  cash,  but  when  cash 
could  not  be  fingered,  they  conveniently  took  whatever 
"  inducements  "  \vere  offered.  We  have  come  across  in- 
-tance  after  instance  in  which  embryo  capitalist-  or- 
ganizcd  corporations,  rolled  off  stocks  and  bonds  (which 


Till.    P. \ClKiC    <jl. \K1KT  12<) 

cost  the  expense  of  engraving  only)   and  used  them,  in 
lien  of  eash,  as  payment  for  legislative  votes. 

If  the  average  railroad  corporation,  argued  the  Pa- 
cific quartet,  could  so  easily,  by  the  simple  media  of 
bought  laws,  annex  itself  to  public  treasuries,  what  could 
not  they  do?  A  far  more  telling  and  impressive  public 
argument  the  Huntington  group  had  than  most  of  their 
lellow  railroad  promoters.  Already  "  in  the  fifties  " 
there  was  an  insistent,  genuinely  enthusiastic  popular 
demand,  reaching  almost  the  proportions  of  a  clamor, 
for  railroad  connections  between  coast  and  coast.  Upon 
the  strength  of  this  eagerness,  much  bounty  and  booty 
could  be  extracted.  At  the  outbreak  of  the  Civil  War 
the  demand  became  irresistibly  intensified  by  the  lack  of 
speedy  intercoastal  communications,  both  railroad  and 
telegraph.  Moreover,  the  popular  imagination  was  cap- 
tivated and  dazzled  by  the  immensity  of  the  undertaking. 
\\~ith  prevailing  opinion  in  so  favorably  an  assenting 
state,  matters  could  be  pliably  molded. 


TltKY    C,KT    TIIKIK    LAWS. 

Yet  while  the  people,  as  a  whole,  were  desirous  of  Pa- 
cific railroads,  considerable  sections  of  them  were  by  no 
means  reconciled  to  the  corrupt  legislative  methods  of 
presenting  large  area.--  of  land  and  large  advances  of 
money  for  private  enrichment. 

The  farmer,  burdened  by  the  price  that  he  had  to  pay 
for  his  small  farm,  and  often  blanketed  by  a  mortgage, 
did  not  quite  approve  of  the  squandering  of  the  public 
domain  fur  the  benefit  of  a  law-created  handful  of 
grandee.-.  The  small  traders,  resenting  the  very  idea  of 
any  class  above  them,  bitterly  objected,  as  a  class,  to 
great  capitalists  being  created  by  virtual  edict  of  law. 


T3O         HISTORY    ()]•    T11K    C.KKAT    AMKKICAX     FORTTXKS 

The  alert  and  organized  sections  of  the  working  class 
saw  in  this  constant  manipulation  of  legislative  bodies 
another  perversion  of  governmental  power  for  the  ag- 
grandizement of  a  small  and  hostile  class,  and  the  rapid 
impetus  to  an  overshadowing  plutocracy.  Aware  of  this 
general  feeling,  legislative  assemblies  had  to  be  "  in- 
duced " ;  they  might  themselves  use  fine-sounding  and 
seemingly  solid  arguments  in  explaining  to  constituencies ; 
but  a  very  different  incentive  appealed  to  them  ;  settle- 
ments had  to  be  made  in  cash  or  its  equivalent. - 

A  more  temptingly  opportune  time  for  spoliative  meas- 

-  The  California  Legislature  was  frequently  charged  with  cor- 
ruption, hut  its  farcical  investigations  of  itself  always  resulted 
in  whitewashing  reports. 

One  of  these  scandals  was  that  of  April,  1861,  when  John  F. 
McCauley  charged  that  legislators  had  sought  bribes  from  him 
to  pass  a  claim  that  he  held  against  the  State  of  California. 
The  Legislature  appointed  an  investigating  committee  on  April 
18,  1861.  (See  Appendix  to  Journal  of  California  Assembly, 
Twelfth  Session,  1861.  Doc.  No.  15).  .McCauley  testified  that 
one  Wittgenstein,  a  go-between  for  Chairman  VValden  of  the 
Assembly  Committee  on  Claims,  approached  him  and  told  him 
that  for  a  favorable  report  Walden  wanted  $400  or  $500 
(pp.  2-4).  In  his  testimony  Wittgenstein  admitted  telling  Mc- 
Cauley that  Walden  had  made  $7,000  or  $8,000  in  that  way  :  he 
also  admitted  saying  that  Walden  had  made  a  large  amount  of 
money  during  the  session.  Wittgenstein  substantially  admitted 
the  truth  of  McCauley's  charges  (pp.  5-11).  The  report,  how- 
ever, was  a  whitewashing  one. 

Another  scandal  was  when  the  editor  of  the  newspaper,  the 
''  American  Flag.''  specifically  charged,  in  1866.  that  a  fund  of 
$108,000  had  been  expended  in  the  Legislature  by  local  bankers. 
commission  merchants  and  importers  to  prevent  the  repeal  of  a 
law  called  the  Specific  Contract  Act.  lie  accused  seven  Sen 
ators  of  having  sold  their  votes  for  Su.ooo  each.  An  investi- 
gating committee  of  the  California  Senate  was  appointed.  One 
•  it  the  witnesses  examined  was  Darius  O.  Mills,  then  a  San 
Francisco  banker,  and  later  a  prominent  New  York  multi- 
millionaire. He  and  other  witnesses  denied  knowing  anything 
of  a  corruption  fund.  The  committee's  report  exonerated  the 
accused. — ''  Report  of  Senate  Committee  of  Investigation  on 
Certain  Charges  Made  by  the  F.ditor  of  the  '  American  Flau,'  " 
Appendix  to  Journal  of  Senate  and  Assembly  of  the  Legislature 
of  California.  7866.  Vol.  ii. 


THE    PACIFIC    Ol'AUTtT  131 

ures  than  the  period  of  the  Civil  War  could  hardly  have 
been  found.  Kngrossed  in  the  tumultuous  upheavals  of 
those  convulsive  years,  the  people  had  neither  the  pa- 
tience nor  disposition  to  keep  close  track  of  routine  en- 
actments in  Congress  or  in  the  legislatures.  At  the  very 
beginning  of  that  \var  the  Pluntington  group  organized 
the  Central  Pacific  Railroad  Company,  with  a  capital 
stock  of  $8,500.000,  nearly  the  whole  of  which  capital  was 
fictitious  so  far  as  actual  investment  of  money  was  con- 
cerned. At  once  they  directed  their  energies  right  to 
the  core  of  things,  lluntington  betook  himself  to  Wash- 
ington to  lobby  in  Congress,  while  Stanford,  elected  Gov- 
ernor of  California,  busied  himself  with  similar  ends  at 
home.  Xo  visionaries  were  they,  but  practical  men  who 
knew  how  to  proceed  straightway. 

Stanford's  work  quickly  bore  fruit  in  California:  the 
city  of  Sacramento  was  authorized  to  donate  $400,000; 
Placer  County  to  loan  $550,000,  and  the  State  of  Califor- 
nia to  hand  over  $2,100,000.  At  the  same  time,  llunt- 
ington was  doing  surpassing  missionary  dutv  in  Con- 
gress. An  act  was  passed  in  1862  by  which  about  $25,- 
000,000  in  Government  six-per-cent.  bond-  and  about 
4,500,000  acres  of  public  lands  were  placed  at  the  dis- 
posal of  the  quartet.  The  few  protects  against  these 
great  gifts  were  immediately  silenced.  "  Is  not  the  Gov- 
ernment fully  protected?"  the  promoter-  innocentlv  in- 
quired. "  Are  not  it-  loans  covered  bv  a  first  mortgage? 
If  the  company  default-,  cannot  the  Government  step  in 
and  recover?"  Thi-  sounded  plausible.  Two  years 
later,  however,  at  the  very  time  when  I  as  we  have  seen  ) 
the  Union  Pacific  coterie  were  corrupting  Congress  to  get 
greater  land  grants  and  altered  law--,  Huntington  again 
debauched  Congress.  An  act  wn-  passed  doubling  the 
Central  Pacific'^  land  grant  and  relegating  the  Govern- 


l$2         HISTORY    OF    Till-:    GkHAT    AMERICAN     FORTUNES 

mem':-  claim  on  the  Central  Pacific  to  the  under  position 
"I  a  second  mortgage.  And.  as  it  turned  out  later,  the 
contract  with  the  Government  was  so  deftly  drawn  that, 
according  to  a  decision  of  the  Supreme  Court  of  the 
I  nited  States  subsequently,  the  Government's  lien  cov- 
ered the  main  lines  only,  and  not  the  branch  lines. 
Whether  this  contract,  as  drawn,  was  a  result  of  collu- 
sion with  Government  officials  was  never  determined. 

"  Whence  came  the  means,"  asks  Bancroft,  ':  by  which 
four  men  with  only  moderate  fortunes  were  enabled  to 
build,  buy.  own  and  operate  all  the  roads  belonging  to 
the  Central  and  Southern  Pacific  systems?  In  1869,  be- 
fore the  last  spike  had  been  driven  at  Promontory,  the 
railroad  quartet,  besides  owning  the  road,  had  received 
as  a  loan  $24,000,000  of  Government  bonds  forming 
a  second  mortgage  on  the  road,  together  with  8400.000 
of  San  Francisco  bonds  as  an  unconditional  gift.  $550.- 
ooo  of  county  bond-,  and  $2,100.000  paid,  or  to  be  paid, 
by  the  State  of  California  in  return  for  services  to  be 
rendered  by  the  company.'"  3 

The  operations  of  the  quartet  were  simple  enough. 
Once  they  had  obtained  the  requisite  loans  and  gilts, 
they  threw  aside  all  pretenses,  and  openly  and  vigor- 
ously set  out  to  defraud  all  within  reach,  not  only  the 
Federal  Government,  but  also  States,  counties,  cities  and 
investors.  First,  they  organized  a  construction  com- 
pnny,  called  the  Credit  and  Finance  Company.  Then 
they  made  a  contract  with  themselves  to  build  the  Cen- 
tral  Pacific.  With  the  aid  of  the  loans  given  by  Sacra- 
m .-nto  and  Placer  Countv,  they  built  enough  road  to 
draw  $^48.000  from  the  Government  as  the  subsidy  of 
the  fir<t  section.  ~P>y  repeating  the  process  they  had  the 
entire  road  constructed,  with  scarcely  the  expenditure  of 

3  "  History  of  the  Pacific  States."  xix:62. 


Till:    PACIFIC    (JUAKTET  1J3 

a  single  dollar  of  their  own.  The  next  step  was  to  load 
it  down  with  a  capitalization  of  $139,000,000  4  which  was 
the  beginning  of  still  more  stock  inflation. 

A    THEFT    OF    $5O,OOO,OOO. 

What  was  the  total  of  their  frauds?  The  report  of 
the  Pacific  Railroad  Commission  gives  no  adequate  idea 
of  the  immensely  valuable  rights  and  possessions  of  all 
kinds  that  they  secured  by  bribery  and  fraud.  Rut  it 
does  give  a  comprehensive  account  of  their  money  and 
stock  plundering^.  "  In  the  accounts  of  the  Central  Pa- 
cific Railroad  Company,"  the  report  of  the  Pacific  Rail- 
road Commission  of  1887  states,  "the  division  of  earn- 
ings for  improper  purposes  amounted  to  many  millions, 
through  contracts  made  by  Messrs.  Stanford,  Hunting- 
ton,  Hopkins  and  Crocker  with  themselves."  According 
to  this  report,  the  cost  of  building  1.171  miles  of  road 
was  $27,217.000,  but  they  fraudulently  charged  three 
times  that  sum.  Here  was  a  theft  of  more  than  fiftv 
millions  in  one  grand  haul.  Tn  addition  to  stolen  cash, 
they  issued  to  themselves  $33,722,000  in  bonds  and  $49.- 
005.000  of  stock.  T'ut  these  sums  were  only  part  of  the 
total  thefts.  The  Pacific  Railroad  Commission's  report 
goes  on  to  say : 

'Then  as  directors  of  the  Central  Pacific,  they  took 
leases  of  their  own  lines  for  the  Central  Pacific  for 
$3.400,000  per  annum  ;  which  was  at  the  rate  of  nearly 
thirteen  per  cent.  Fifteen  months  ago  (in  i88(>)  three 
of  these  directors  (Stanford,  Huntington  and  Crocker) 
contracted  with  them-elve<  to  build  an  extension  of  one 
hundred  and  three  miles.  In  payment  tliev  issued  stock 
to  the  amount  of  $8.000,000,  and  bomP  to  the-  amount 


134         HISTORY    01'    THE    GREAT    AMERICAN    FORTUNES 

of  $4,500,000,  the  market  value  of  the  stock  and  bonds 
being  at  the  time  $8,340,000.  The  actual  cost  of  con- 
struction was  $3,505,000,  so  that  they  personally  profited 
by  their  own  votes  by  that  single  transaction  to  the  ex- 
tent of  $4,834,000,"  etc.,  etc. 


GROSS  CORRUPTION  OF  CONGRESS. 

The  process  of  corruption  and  theft  was  continued  in 
the  building  of  the  Southern  Pacific  Railroad. 

In  1871  Congress  chartered  the  Texas  and  Pacific  Rail- 
road to  run  from  .Marshall,  Texas,  to  San  Diego,  Cal., 
and  presented  the  company  with  approximately  18,000,- 
ooo  acres  of  public  lands  on  condition  that  the  road  was 
to  be  completed  in  ten  years;  otherwise  the  land  grant 
was  to  be  declared  forfeited.  At  the  same  time,  Congress 
chartered  the  Southern  Pacific  Railroad  Company  to 
build  a  line  from  El  Paso.  Texas,  to  San  Francisco,  and 
gave  it  a  gift  of  about  5.000,000  acres  of  public  land-. 
The  Texas  and  Pacific  project  was  owned  by  a  group 
of  capitalists  headed  by  Scott,  of  the  Pennsylvania  Rail- 
road ;  the  1  luntington  men  were  at  the  head  of  the  South- 
ern Pacific  Railroad  Company. 

These  two  groups  of  capitalists  soon  came  into  col- 
li-ion  :  each  fiercely  sought  to  oust  the  other,  and  gain 
an  undisputed  monopoly  of  transportation  in  the  terri- 
tory  in  question.  The  fight  was  carried  into  Congress 
each  side  caused  the  introduction  of  bills  aimed  at  crip- 
pling the  other.  The  contest  then  narrowed  to  a  ques- 
tion of  \\hich  group  could  corrupt  Congress  the  more 
effectually. 

"Scot!."  wrote  1  Tuntington  on  January  2(),  1876.  "is 
making  a  terrible  effort  to  pass  his  bill,  and  he  has  many 
advantage-  with  hi-  railroad  running  out  from  Washing- 


TI1K    I'.U'llTC     (H'AUTKT  135 

tun  in  almost  every  direction,  on  which  he  gives  l-Yee 
Passes  to  everyone  \vho  can  help  him  ever  so  little. 
It  has  cost  money  to  fix  things,  so  1  know  his 
bill  would  not  pass.  1  believe  with  $200,000  we  can  pass 
our  bill."  5 

On  March  6,  1876,  Huntington  wrote  that  "the  Rail- 
road Committee  of  the  House  was  set  up  for  Scott,  and  it 
has  been  a  very  difficult  matter  to  switch  a  majority  of 
the  Committee  from  him,  but  1  think  it  has  been  done." 
On  November  11,  1876,  Huntington  wrote  further  to  one 
of  his  associates,  "  I  am  glad  to  learn  that  you  will  send 
to  this  office  $2,000,000  by  the  first  of  January."  On 
May  3,  1878,  he  notified  his  partners:  '  The  T.  and  P. 
folks  are  working  hard  on  their  bill  and  say  they  are 
sure  to  pass  it,  but  1  do  not  believe  it.  They  offered  one 
member  of  Congress  $  1,000  cash  down,  $5,000  when  the 
bill  was  passed  and  Si 0,000  of  the  bonds  when  they  got 
them  if  he  would  vote  for  the  bill."6 

Huntington  came  out  victorious.  'There  is  no  room 
for  doubt,"  reported  the  Pacific  Railroads  Commission 

5  We  have  seen,  in  the  narration  of  the  Gould  fortune,  how 
Scott  hail  been  placed  in  charge  of  the  Government  supervision 
of  railroad  transportation  during  the  Civil  War,  and  how  a  Con- 
gressional committee  had  exposed  the  immense  extortions  in 
conveying  soldiers,  equipment  and  supplies  that  some  of  the 
Northern  railroads  ,-,uccess fully  carried  on  immediately  folli  wing 
Ins  appointment. 

''•  Flu  re  were1  many  01  these  letters;  we  have  already  given  a 
glimpse  of  one  of  them  in  Chapter  iii.  Vol.  iii.  They  came  to 
liyht  (as  noted  in  that  chapter)  in  a  lawsuit  between  two  fac- 
tions. They  were  published  in  full  in  "Driven  from  Sea  to 
Sea."  by  C."  C.  Post. 

"It  is  impo>Ml)ie. "  n  ported  the  1'aciiie  Railroad  Commission 
in  1887.  "to  read  the  evidence  of  C.  P.  Huntington  and  Leland 
Stanford  and  the  Collon  letters  without  reaching  ihe  coiiclu 
sion  that  very  large  sums  of  money  have  been  improperly  used 
in  connection  with  1<  ui  'ation." — Vol.  i:  i .:  i .  llumingion  was 
accustomed  to  boa>iiii'4'  of  his  method  of  bribery,  "Whenever 
possible  1  always  try  to  pav  in  check-',  for  ihe  men  who  take 
them  are  ever  afterward  mv  slaves." 


of  1887,  "that  a  large  portion  of  $4,818,535  was  used 
for  the  purpose  of  influencing  legislation,  and  prcventin;.; 
the  passage  o,  measures  deemed  hostile  to  the  interests 
of  the  company,  and  for  the  purpose  of  influencing  elec- 
iii  >ns.v  T 

The  next  thing-  the  Huntington  group  did  was  to  force 
the  Eastern  capitalists  out  of  the  Texas  and  Pacific  Rail- 
read,  absorb  that  line  into  their  own  system,  and  illegally 
grab  the  eighteen  million-acre  land  grant  of  the  Texas 
and  Pacific.  Even  under  the  law,  as  it  stood,  the  Texas 
and  Pacific  was  not  entitled  to  the  land  grant.  The 
House  Committee  on  Judiciary  on  August  3,  1882,  after 
an  investigation,  declared  that  the  Texas  and  Pacific  Rail- 
road Company  had  never  completed  any  part  of  the 
route  for  which  the  land  grant  in  Xew  Mexico.  Arizona 
and  California  was  given  ;  that  it  "  had  never  earned  the 
grant  "  ;  that  it  did  not  purpose  to  build  the  road  for 
which  it  was  chartered  and  endowed,  and  that  it  was 
transferring  to  the  Southern  Pacific  Railroad  Company 
"all  of  the  rights  and  titles  to  the  land  in  question."8 
The  Committee  on  Judiciary  prepared  a  resolution  de- 
claring ihc  forfeiture  of  the  land  grant,  and  urged  its 
passage  by  Congress  as  a  joint  resolution.  It  did  not 
pass. 


Presenting  the  general  results  as  nearly  as  official 
investigations  could  ascertain  them,  this  is  what  ilnnt- 
ington  and  hi<  associates  did:  They  had  received  hun- 
dreds of  millions  of  dollars  in  the  form  ot  money,  bond- 
and  land-  from  ( lovernment.  Slates,  counties  and  mu- 


;IIK  I'Aciric  gi'AKTi-rr  137 

» 

nicipalitiex  As  controllers  of  the  Contract  and  Finance 
Company  and  oilier  construction  companies,  they  had 
turned  over  to  themselves  $142,000,000  in  all  for  ostensi- 
ble construction  work.  They  had  expended  at  least  five 
millions  for  corrupt  political  purposes.  They  had  stu- 
pendously watered  the  stock  of  their  railroads,  and  with 
the  cumulative  proceeds  of  their  thefts  had  secured 
control  of  nineteen  distinct  railway  systems  and  of  steam- 
ship lines,  also.  They  had,  by  fraud,  robbed  the  Gov- 
ernment of  many  millions  of  acres  of  land ;  thev  had 
defrauded  the  Government  of  the  bulk  of  the  funds  that 
it  had  advanced ;  they  refused  to  pay  more  than  the 
merest  nominal  taxation,  and  they  extorted  onerous  rates 
for  transportation. 

This  is  the  general  summarv  of  their  acts  as  set  forth 
in  the  report  of  the  Pacific  Railroads  Commission. 
"  From  the  evils  of  subsidy-giving,"  says  Bancroft, 

the  country  suffered  for  many  years.  The  population  wa.- 
shifting,  the  available  resources  of  the  State  [California]  feu- : 
but  notwithstanding,  there  was  hardly  a  county  in  it  that  by 
1870  had  not  bunU'iied  itself  with  a  debt  of  from  Smo.ooo  to 
^oo.coo  at  a  high  rate  of  interest,  to  run  in  some  instance-; 
Mxiy  years.  Companies  incorporated  under  a  general  law  be- 
sieged the  Legislature  annually  to  pass  acts  authorizing  the 
people  to  vote  on  incurring  this  indebtedness;  newspapers  pa- 
rad'.-d  tile  benefits  to  be  rcceuvd  from  every  railroad  scheme. 
often  without  knowing  whether  it  had  any  merit.  Thus,  urged 
by  the  Legislature  and  the  press,  the  people  passed  under  the 
rod  with  the  greatest  equanimity/' 


inn 


138 

railroads  were  "  apt  to  fix  the  rates  on  a  given 
article  '  all  it  would  bear.'  "  10  This  description  ap- 
plied not  only  to  California  but  to  every  State  and  Ter- 
ritory reached  directly  or  indirectly  by  railroads.  The 
very  people  whose  representatives  had  given  public  prop- 
erty so  lavishly  to  a  few,  were  robbed  in  every  manner 
that  ingenuity  could  formulate.  Not  only  was  the  pub- 
lic plundered  ;  Huntingdon  and  his  associates  ground  out 
their  own  lesser  stockholders  by  the  same  fraudulent 
methods  that  Gould  and  Sage  used,  and  also,  like  Gould 
and  Sage,  they  cheated  out  a  horde  of  confiding  in- 
vestors. 

The  disillusioning  of  the  people  of  the  Pacific  States 
was  reflected  in  the  messages  of  the  various  Governors. 
Only  a  few  years  previously,  the  Governors  of  Califor- 
nia and  other  States  had  urged  the  Legislatures  to  be 
extremely  generous  in  donating  large  bounties  to  rail- 
road projectors  and  other  capitalists.  They  wrote  rap- 
turouslv  of  the  great  public  benefits  certain  to  come  from 
the  construction  of  railroads,  and  praised  the  railroad 
promoters  as  men  of  the  loftiest  public  spirit.  Soon  a 
decided  change  came  over  the  spirit  of  these  message-. 
Hitter  complaints  of  extortion  and  robbery  succeeded 
glowing  encomiums.  In  his  message  to  the  California 
Legislature,  in  1860,,  Governor  11.  Tl.  Haight  had  thi- 
1'  >  say  : 

Our  land  system  seems  to  be  mainly  formed  to  ta 
ciiitate  ihc  acquisition  of  lar^e  bodies  of  land  by  capitalist.-  or 
•••••[  'rations,  either  a.-  donations,  or  at  nominal  prices.  .  .  . 
•rs  who  pnrcha.-ed  from  the  State  lands  sold  as  swamp 
or  overflowed,  find  their  farms  claimed  under  the  railroad 
grants,  and  themselves  involved  in  expensive  contests  before 
Registers  of  [.and  Office-;.1' 


Tin:  PACIFIC  QUARTET  I3<j 

In  his  inaugural  address,  delivered  on  December  8. 
1871,  Governor  Xewton  Booth  of  California  expressed 
himself : 

The  undue  political  influence  and  financial  control  that  many 
corporations  have  assumed,  is  not  the  only  evil  presented  by 
them.  In  their  internal  administration,  between  majorities  and 
minorities,  directors  and  stockholders,  cases  of  the  grossest  in- 
justice are  constantly  arising.  It  is  not  uncommon  to  find  one 
class  of  stockholders  enriching  themselves  from  a  company 
which  impoverishes  another.  .  .  .  The  organization  of  cor- 
porations within  corporations  is  a  refinement  of  subtlety  and 
fraud  which  should  be  positively  prevented  by  law.12 

After  describing  the  Central  Pacific  Railroad's  system 
of  discrimination  in  fares  and  freights,  "  a  grievous  bur- 
den, so  long  and  patiently  endured  by  our  people,"  Gov- 
ernor John  H.  Kinkhead  of  Xevada  wrote  to  the  Leg- 
islature  of  that  State  in  1879: 

Crave,  and  f  believe  well-grounded,  complaint  is  made  con- 
cerning the  valuation  of  railroad  property  for  taxation.  The 
owners  of  this  species  of  property  are  granted  exceptional  priv- 
ileges, and  should  be  made  to  bear  their  equal  part  of  all  of 
the  expenses  of  Government. 

Xot  one  of  thc>e  messages  had  any  vital  result.  In 
some  instances  they  were  sincere,  but,  as  a  rule,  they 
were  intended  to  be  nothing  more  than  wordy  sops  to 
appease  middle-class  public  opinion.1"  Some  of  the  very 

'-Inaugural   Address  of  Go\ .   Xewton    Booth,  etc.,   10-11. 

13  The  merchants,  manufacturers  and  importers  who  had  ap- 
plauded and  banqueted  Huutington  and  his  associates  only  a 
few  years  previously,  were  now  caustically  denouncing  them, 
not  for  their  direct  thefts,  but  for  their  extortions.  For  ex- 
ample, see  "A  Petition  of  the  Citizen-;  of  San  Francisco  Rela- 
tive to  the  Arbitrary  Exactions  And  lniu>ticev;  of  Railroad 
Companies."  Nearly  all  of  the  signers  were  business  firms. 
They  complained,  in  this  peii'i'>n,  of  the  "arbitrary  exactions 
and  injustice  of  railroad  companies,"  and  demanded  State  regu- 
lations.—  Appendix  to  California  Senate  and  Assembly  Journal. 
Twentieth  Session,  1874,  Vol.  iv.  Doc.  No.  8. 


I4O         HISTORY    OF    THE    GREAT    AMERICAN    FORTUNES 

Governors  who  wrote  them  with  ^uch  a  display  of  ear- 
nestness were  put  in  power  and  controlled  by  the  very 
corporations  of  which  they  complained.  The  legisla- 
tures were  wholly  under  the  domination  of  the  great 
private  corporations,  and  the  judiciary  almost  wholly  so. 
Year  after  year,  the  different  Governors  denounced  cor- 
porate practices,  and  demanded  corrective  legislation, 
which  never  came.  Two  and  three  decades  after  Gov- 
ernor Xewton  Booth's  denunciation,  Governors  were  still 
writing  similar  futile  messages. 

Acclaimed  at  first  as  public  benefactors,  Huntington 
and  his  associates  were  subjected  to  the  fiercest  de- 
nunciation when  the  people  realized  the  enormous  frauds 
that  they  had  committed.  For  the  frauds,  of  which  an 
epitome  has  been  here  given,  were  only  a  portion  of  the 
total.  It  is  hardly  necessary  to  plunge  into  the  tortu- 
ous mass  and  maze  of  detail :  how  they  resorted  to  nim- 
ble subterfuges  to  escape  their  obligations,  and  de- 
frauded the  Government ;  how  they  corrupted  and  ruled 
States  and  Territories,  and  seized  hold  of  one  possession 
after  another;  and  how,  through  their  control  of  political 
machinery,  they  sent  Representatives  and  Senators  to 
Washington  as  though  they  were  so  many  errand  boy-. 
The  Pacific  quartet  were  among  the  first  of  the  mag- 
nates to  come  out  into  the  open  and  exercise  political 
power  directly,  instead  of  intrusting  it  to  retainers.  To 
have  one  of  their  own  members  in  the  United  State^ 
Senate,  there  to  keep  alert  for  their  interests,  they  caused 
the  California  Legislature,  in  1887,  to  elect  Stanford  to 
that  body. 

Hopkins  died  in  1876,  Crocker  in  1888.  Very  charac- 
t eristic  <»f  the  peculiarities  of  prevailing  society  was  one 
<if  the  ways  in  which  [!<>;>kin.-'  million-  were  used.  Ili- 
\vidow  inherited  hi-  wealth  and  remarried,  and  part  of 


T11K    PACIFIC    01. \KTK1  1  _;  i 

her  inheritance  went  toward  the  purchase  of  an  old-e- 
tablished  Xew  York  newspaper.  Thus  was  witnessed, 
as  in  the  case  of  Gould,  a  newspaper  being  financed 
by  the  proceeds  of  theft,  and  the  inheritors  of  those  pro- 
ceeds giving'  directions  as  to  what  should  constitute  the 
moral  and  political  pabulum  fed  out  to  the  public.  A 
splendid  country  mansion,  costing  $2,000,000,  at  Great 
Barrington,  Mass.,  is  a  standing  explanation  of  how 
some  more  of  Hopkins'  millions  were  applied.  Crocker 
left  a  fortune  nominally  estimated  at  $40,000,000. 

Stanford's  wealth  was  so  great  that  he,  like  the  As- 
tors,  the  Yanderbilts,  Goulds  and  other  magnates,  was 
forced  to  the  necessity  of  investing  the  surplus.  Part 
of  the  many  millions  stolen  from  the  Government  and 
expropriated  from  the  people,  wras  put  into  San  Fran- 
cisco street  railways,14  of  which  system  he  owned  a  one- 
fourth  share,  and  from  which  he  derived  ten  per  cent,  a 
year.  Other  millions  were  invested  in  other  forms  of 
property.  He  became  a  great  landed  proprietor.  He 
owned  the  immense  Vina  vineyard,  comprising  100,000 
acres  of  land  ;  the  Palo  Alto  ranch,  with  its  extensive 
breeding  establishment  and  its  great  vineyards,  and  he 
owned  much  other  real  estate  in  San  Francisco  and  else- 
where. From  his  stocks  and  lands  he  received,  it  was 
estimated,  an  income  of  Si. 000,000  a  year. 

Up  to  1885  he  had  been  merely  a  financier,  so-called, 
praised  by  some  as  a  great  railroad  builder,  by  others  as 
a  colossal  thief.  Xow  lie  became  a  full-fledged  philan- 
thropist by  giving  property  worth  many  millions  for  the 
establishment  of  the  Leland  Stanford,  Jr.,  University. 

14  Recent  developments  in  San  Francisco  showing  how  brib- 
ery was  used  in  getting  street  railway  franchises  are  but  an  indi- 
cation of  the  corrupt  methods  long  prevailing. 


142         HISTORY    OF    THE    GREAT.  AMERICAN    FORTV-NI>- 

Thus  \vas  another  "  scat  of   learning  ;<  established  jo 
be  subjected  to  the  censorship  of  money. 


STANFORD  IN  THE   UNITED  STATES  SENATE. 

As  a  United  States  Senator.  Stanford's  salary  was 
$5,000  a  year;  he  spent  875,000  every  session;  it  was  a 
pastime  of  this  man  to  throw  twenty-dollar  gold  pieces  to 
the  newsboys.  His  chief  business  in  Washington  was 
to  prevent  the  Government  from  taking'  genuine  action 
compelling  him  and  his  band  to  disgorge ;  to  stifle  all  hos- 
tile proceedings,  and  to  get  through  laws  giving  more 
franchises,  land,  waterway  rights  and  special  privileges, 
and  to  secure  license  for  extortions.  On  the  who!'.-. 
he  succeeded.  This  ponderous  magnate,  weighing  two 
hundred  and  thirty-four  pounds,  was  the  political  wire- 
puller of  the  quartet,  while  Hunting-ton  was  the  crafty 
financier,  full  of  sharp  tricks  and  devious  contrivances. 
\Yhen  Stanford  died,  in  1893.  his  estate  was  appraised 
a>  nominally  worth  about  $18,000.000.  but  its  size  wa- 
considerably  greater.  lie  had  given  large  sums  for  the 
Leland  Stanford,  Jr..  University,  and  in  his  will  he  pro- 
vided more  millions.  The  remainder  of  his  estate  went 
to  his  widow,  who  likewise  gave  donations  to  this  uni- 
versity: in  all.  Air.  and  Mrs.  Stanford  pre>ented  fully 
$30.000,000  for  the  establishment,  expansion  and  per- 
petuation of  the  institution  named  after  their  son. 

The  fortune  plucked  by  Huntington  was  greater  than 
that  of  any  of  the  other-  of  the  quartet.  At  his  death, 
in  igoo.  it  was  estimated  at  from  $50.000.000  to  $80,- 
000,000.  Tt  embraced  interests  in  a  va-t  number  of  rail- 
road, -tram-hip  and  other  corporations  —  inU-re-t-  which 
he  had  bought  with  his  share  of  the  Pacific  railroad-' 


LELAND  STANFORD. 


143 

loot,  or  engineered  into  his  control  by  fraud.  A  favorite 
boast  of  bis  at  one  time  was  that  lie  could  travel  from 
the  Atlantic  to  the  Pacific  in  his  own  cars  and  over  his 
own  rails,  and  that  he  could  also,  if  he  chose,  sail  in  his 
own  steamships  from  Brazil  to  New  York,  from  thence 
to  Colon,  from  Panama  to  San  Francisco,  and  from 
there  to  Yokohama  and  Hongkong.  His  power  was 
gigantic;  he  controlled  the  economic  life  of  millions  of 
workers,  and  dictated  the  government  of  a  half  dozen 
States.  His  plunder  was  intact.  In  1894  he  was  quoted 
as  saying  in  answer  to  a  report :  "1  never  made  any 
exhibition  of  $44,000,0(30  of  bonds,  although  1  could 
have  displayed  twice  as  much  in  amount." 

THEY     IlKCOMi:    ARISTOCRATS. 

No  intelligent  person  was  unaware  of  the  long  and 
great  series  of  frauds  and  thefts  that  Huntington,  Stan- 
ford, Crocker  and  Hopkins  had  plowed  through  to 
squeeze  their  wealth.  Yet,  while  severely  denounced, 
they  did  not  have  to  meet  the  same  taunts  and  revilings 
constantly  cast  at  Jay  Could.  Essentially  they  were  of 
the  same  stripe  as  Could,  but  Could  was  held  up  to  popu- 
lar maledictions  as  a  railroad  wrecker,  while  criticism  of 
the  Huntington  group  was  always  tempered  with  the 
remark.  "  Well,  if  they  stole  colossal  sums,  they  at  least 
constructed  great  railways  and  were  big  factors  in  the 
development  of  the  country."  And  they  had  no  diffi- 
culty in  getting  instant  entree  into  what  was  represented 
as  the  "  best  society."  Xo  question  was  raised  as  to 
their  eligibility.  I>y  power  of  money  they  at  once  be- 
came a  part  of  the  financial  aristocracy.  Also,  by  this 
same  power  of  money,  1  luntington's  adopted  daughter 


144          HISTORY    OK    THE    CREAT    AMERICAN    FORTUNES 

entered  with  ease  the  fine  circle:  of  European  titled  aris- 
tocracy ;  she  married  Prince  Ilaztfeld,  in  1889,  and  re- 
ceived a  paternal  present  of  several  million  dollars. 

Huntington  lived  like  a  grandee  • —  at  least  residen- 
tially.  Fie  had  a  mansion  in  San  Francisco ;  a  superb 
place  in  the  Adirondacks,  for  which  he  paid  $250,000;  a 
palatial  country  home  at  Throgg's  Xeck,  X.  Y. ;  and  he 
built,  at  an  expense  of  millions,  an  impressive  pile  at 
1-ifth  avenue  and  Fifty-seventh  street,  Xew  York  City.15 
—  that  aristocratic  avenue  whither  so  many  magnates, 
after  a  career  of  fraud  and  theft,  came  to  ensconce 
themselves  in  befitting  grandeur.  Eight  years  were  spent 
in  building,  at  a  cost  of  $250,000,  a  mausoleum  in  Wood- 
lawn  Cemetery  —  a  classic,  capacious  tomb  of  marble. 

THEIR    LINES    TAKEN    OVER    BY    HARRIMAN. 

And  there  his  remains  now  lie.  After  his  death  the 
inventory  of  his  estate  showed  that  his  wealth  was  ap- 
parently about  $60,000,000 ;  unquestionably  it  totalled  a 
much  larger  sum.  His  widow,  who  still  lives,  inherited 
the  greater  part  of  it.  But  what  became  of  the  control 
of  the  railroad  and  steamship  lines  which  he  dominated? 
His  death  occurred  at  about  the  very  time  the  Standard 
Oil  oligarch}',  acting  through  Harriman  and  its  banking 
houses,  was  prepared,  in  its  gradual  reaching  out  for 
railroad  ownership,  to  buy  in  the  ownership  of  the  Pa- 
cific railroad  and  steamship  lines.  The  great  surplus  of 
the  Standard  Oil  treasury  easily  furnished  the  many 
millions  needed  to  buy  over  the  shares  held  by  Mrs. 
Huntington ;  and  the  control  of  the  Southern  Pacific 
and  other  extensive  line?,  both  railroad  and  steamship, 

'•"Hut  after  ii  wns  cnnn>!eft  d  lie  could  never  be  persuaded  to 
live  in  it.  His  reason  was  n  belief  in  the  superstition  that  men 
build  houses  only  to  die  in  them. 


TT1F.    I'.U'I  !•!('    nUARTKT  T.|  ' 

built  and  sustained  by  fraud  and  theft,  was  taken  over  l:y 
the  all-powerful  Standard  Oil  magnates,  thus  markir,  v, 
one  more  aggressive  step  in  the  assumption  of  a  central- 
ized ownership  of  the  productive  and  distributing  re- 
sources of  the  United  States. 


CHAPTER  VII 
J.  PIERPONT  MORGAN'S  GENESIS 

Did  ever  a  man  of-wealth  lave  more  in  panegyrics  than 
that  conquering  money  hero  of  these  present  times.  J. 
Pierpont  Morgan?  Long  since,  his  fame  was  trumpeted 
to  the  four  quarters  of  the  earth.  His  copious  praises 
have  been  chanted  with  an  extravagance  that  in  the  case 
of  anyone  else  would  have  been  rejected  as  turgid. 
Most  mighty  patriot  and  unexcelled  public-spirited  citi- 
zen, great  financier  and  noble  philanthropist,  marvelou.- 
"  captain  of  industry  "  and  conservator  of  the  social 
structure,  friend  of  kings,  and  king  among  men  — -  these 
are  but  a  .-elected  few  of  the  apotheoses  too  often  seri- 
ously  accepted  by  the  people  at  large.  One  writer  in 
particular,  raptly  reaching  up  for  a  large  expression  of 
homage,  has  touched  almost  the  climax  of  adoration  in 
emblazoning  him.  "  Morgan  the  Magnificent.''  1 


Many  a  hired  or  acquiescent  scribe,  plying  well  his 
trade,  has  reeled  out  his  effusions;  and  the  total  of  these 
lias  produced  a  certain  -ettled.  aggregate  public  opinion 
which  look-  up  to  Morgan  with  unabated  awe  and  ad- 
miration. In  the  firmament  of  wealth  no  man  shines  out 
more  dazzlingby  than  he. 

1  f   ever  there   thrived   a   money   potentate   whose   for- 


,46 


J.     I'IKRPOXT     MOKOAXS    ( IK  X  KSJS  147 

tune  had  been  preeminently  eulogized  as  having  been 
ac([uired  by  pnrilv  of  method,  that  man  is  J.  I'ierpont 
Morgan.  Xot  once  has  he  been  subjected  to  strictures 
of  "  tainted  wealth,"  nor  at  any  time  has  he  had  to 
fight  an  inimical  public  opinion  such  as  Jay  ( iould  had  to 
in  his  day,  and  as  Rockefeller  has  encountered  throughout 
his  career.  For  the  last  thirty  years  Morgan  has  been 
overwhelmed  with  laudations  of  every  character.  Spo- 
radically, perhaps,  some  unshackled  spirit  in  Congress 
or  on  the  public  platform  might  rise  to  break  abruptly 
in  upon  this  outpouring  of  ilatterv  bv  venturing  criti- 
cisms or  revelations.  Hut  these  irruptions  passed  idly 
by,  hardly  noticed  in  the  general,  continuous  deluge  of 
encomiums. 

The  praises,  abundant  enough,  bestowed  upon  other 
magnates,  have  paled  beside  those  heaped  upon  Morgan. 
Without  question,  he  has  been  held  aloft  as  the  most  ex- 
traordinary financier  of  all.  His  feats  in  this  regard 
have  been  recounted  as  though  they  bordered  upon  tin- 
miraculous.  As  a  railroad  and  industrial  magnate  he 
has  been  interminably  glorified.  But  fully  as  much  so 
has  he  been  held  up  to  the  world's  admiration  as  a  philan- 
thropist and  a  man  of  versatile  parts  and  benevolence--  : 
an  cncourager  and  patron  of  Art,  a  lover  of  Literature, 
a  Cntsus  with  a  mind  capable  of  at  once  grasping  the 
most  intricate  detail-  of  finance  and  reveling"  in  the  beau- 
ties and  understanding  of  the  Fine  Arts. 

fn  all  of  the  mass  of  reiterated,  embellished  ac- 
counts turned  out  about  Morgan's  career,  there  is  no 
particle  of  truth  save  one  undisputed  fact.  I  ndeniably 
he  is  one  of  the  towering,  aggressive  money  monarch-- 
of  the  I  "nited  States.  What  does  he  not  own  or  con- 
trol? Scan  the  conglomeration  of  properties  owned 
exclusivelv  bv  him.  or  jointlv  with  others.  What  a 


148 

bewildering  list!  The  mind  is  taxed  at  inventorying 
them,  and  forbears  enumeration.  Banking  institutions 
and  railroads,  industrial  plants  and  mines,  land,  public 
utility  systems  and  shares,  steamships,  publishing  houses 
and  newspapers  —  all  his,  or  partially  so.  Morgan  is 
supereminently  one  of  the  ''  Christian  men  to  whom 
God  in  His  infinite  wisdom  has  confided  the  property 
interests  of  the  country." 

Let  us  scrutinize  the  career  of  this  man  whom  God  is 
alleged  to  have  chosen  as  a  trustee  for  the  steward- 
ship of  the  nation's  property,  and  for  the  guidance  of 
its  Government. 

Foulest  of  all  foul  blasphemies  would  it  be  to  in- 
terrogate the  divine  choice  of  lieutenants  or  derogate 
from  them.  Yet  inasmuch  as  those  who  make  such 
emphatic  claims  of  heavenly  appointment  have  not  as 
yet  been  able  to  produce  their  credentials  (although 
earnestly  beseeched  to  do  so),  we  fallible  mortals  shall 
have  to  fall  back  upon  mere  human  standards  of  judg- 
ment. What  (by  way  of  analogy),  if  the  people  of 
the  United  States  should  forthwith  conclude  to  confis- 
cate all  private  property,  and  declare  collective  owner- 
ship upon  the  ground  that  the  good  Lord  God  had  au- 
thorized it  so  —  what  would  the  present  legal  owner.- 
say?  Would  they  not  resist,  and  demand  written  docu- 
ments, attesting  the  fact  of  divine  sanction,  signed  and 
sealed  by  celestial  notaries?  And  even  if,  let  us  fancy, 
such  documents  were  forthcoming,  would  not  our  mag- 
nates have  the  Supreme  Court  of  the  United  State- 
denounce  them  a<  stupid  forgeries,  issue  a  mandate  for 
the  arrest  of  their  contumacious  Author,  and  again 
-i/'rnlv  declare,  for  the  twentieth  thousand  time,  that  iv 
power  was  superior  to  that  of  the  Supreme  Court  of  the 
V-;t,-d  States? 


J.    riKKl'ONT     MORGAN   S    GKNJiSIS  l^J 

All  other  criteria  failing,  we  shall  have  to  consider 
Morgan  by  the  light  of  terrestrial  evidence  —  perhaps  a 
poor  method,  but  the  only  one  within  our  horizon. 

NOT    OTITK    A    "  SELl'-MADK    MAX." 

Morgan  is  not  one  of  those  magnates  coming  wholly 
under  the  classification  of  being  a  "  self-made  man." 

This  phrase,  used  with  so  unctuous  an  effect  in 
contemporaneous  descriptions  of  rich  men's  careers,  has 
never  been  applied  to  Morgan.  For  once,  there  is  a 
break-off  in  the  almost  unvarying  run  of  similitudes. 
Of  the  early  careers  of  nearly  all  other  multimillion- 
aires the  same  story  has  been  mechanically  written  by 
glorifying  writers ;  how  these  men  started  out  as  poor 
boys,  opened  a  little  store  somewhere,  saved  money 
and  gradually  worked  up  to  wealth.  In  the  nineteenth 
century  the  term  "  ^elf-made  man*'  was  invested  with 
an  inordinate  importance  as  signifying  great  personal 
energy  and  ability  ;  so  much  credit  was  supposed  to  at- 
tach to  it  that  it  was  always  mentioned  with  praise  and 
received  with  pride.  The  object  of  its  application  was 
pointed  out  as  a  man  who,  possessing  no  original  ad- 
vantages, overcame  all  obstacles  by  sheer  force  of  skill 
and  determination,  and  achieved  wealth. 

Thi>.  however,  could  not  be  said  of  J.  Pierpont  Mor- 
gan. His  father,  Junius  S.  Morgan,  was  q  millionaire. 
Ascending  by  successive  .-tcps  from  the  positions  of 
farmer  bov.  dry  goods  clerk,  bank  clerk  and  commer- 
i-ial  man,  Junius  S.  Morgan  bec;une  a  partner  of  George 
IVabodv  in  the  bankinir  business.  When  the  Civil  War 


15O         HISTORY    OF    THE    GREAT    AMERICAN    FORTUNES 

ment  tlieir  wealth  suddenly  began  to  pile  up ;  where 
hitherto  they  had  amassed  riches  by  stages  not  remark- 
ably rapid,  they  now  added  many  millions  within  a 
very  few  years. 

ins  FATHER'S  CAREER. 

How  did  they  contrive  to  do  it?  Biographical  nar- 
ratives aver  that  it  was  done  by  legitimate  banking  meth- 
ods, although  what  those  methods  were  is  not  explained. 
But  if  we  are  to  believe  the  comments  and  criticisms 
appearing  in  the  American  newspapers  of  the  time,  their 
methods  were  not  only  very  far  from  being  legitimate, 
but  were  within  the  pale  of  the  most  active  treason. 
The  Constitution  of  the  United  States  defines  treason 
as  consisting  in  citizens  levying  war  upon  the  nation, 
or  in  giving  aid  and  comfort  to  the  enemy.  According 
to  writers  of  the  day.  the  methods  of  George  Peabody 
and  Company  were  of  such  a  character  as  to  be  not 
only  treasonable,  but  double  treason,  in  that,  while  in 
the  very  act  of  giving  insidious  aid  to  the  enemy,  George 
Peabody  and  Company  were  the  financial  plenipoten- 
tiaries of  the  United  States  Government,  and  were  being 
well  paid  to  advance  its  interests. 

An  article  for  example,  published  in  the  Springfield 
Republican-  in  October,  1866,  asserted:  "For  all 
who  know  anything  of  the  subject  know  very  well  that 
he  [Peabody]  and  his  partners  in  London  gave  us  no 
faith  and  no  help  in  our  struggle  for  national  existence. 
They  participated  to  the  full  in  the  common  English 
distrust  of  our  cause  and  our  success,  and  talked  and 
:  i  d  f  r  i!jc  South  r.'ithrr  lli'in  tor  the  nation." 


Evidently,  it  was  the  sight  of  the  large  benefactions 
which  I'eabody  was  then  giving  that  prompted  the  re- 
marks upon  the  origin  of  his  fortune. 

MILLION'S    FKO.H    ALLEGED    TUKASOX. 

The  writer  of  this  article  went  on  to  say  ihat  George 
Peabody  and  Company  swelled  the  feeling  of  doubt 
abroad,  and  speculated  upon  it.  "  Xo  individuals,"  he 
continued,  "  contributed  so  much  to  Hooding  our  money 
markets  with  the  evidences  of  our  debt  in  Kurope,  and 
breaking  down  their  prices  and  weakening  financial  con- 
fidence in  our  nationality  than  George  I'eabody  and 
Company,  and  none  made  more  money  by  the  operation. 
All  the  money,  and  more,  we  presume,  that  Mr.  I'eabody 
is  giving  away  so'  lavishly  among  our  institutions  of 
learning  was  gained  by  the  speculations  of  his  house  in 
our  misfortunes."  3  A  writer  in  the  New  York  Evening 
Post,  issue  of  October  26,  1866,  also  made  the  same  state- 
ments, accusing  Peabody  and  Junius  S.  Morgan  of  using 
their  positions  as  United  States  financial  representatives 
to  undermine  the  very  cause  that  they  were  paid  to  rep- 
resent, and  profiting  heavily  from  their  teacher}-. 

These  are  a  few  of  the  newspaper  comments  then 
current.  \Yhether  they  were  all  true,  or  partially  true, 
or  not  true  at  all,  we  do  not  know:  no  confirmation  of 
them  can  be  found  in  official  records.  The  statements 

•'•This  article  \vas  al>o  published  in  the  Xe\v  York  '"Times." 
is.-ue  of  October  31.  1866. 

"  \Ye  ha\e  in  ibis  country,"  wrote  Cloud  in  his  ''Monopolies 
and  the  People,"  published  in  1873,  "a  moneyed  aristocracy,  e>>m- 
posed  mainly  of  men  who  speculated  in  t!ie;r  country's  in i-- for- 
tunes during  the  late  Civil  YYar.  ami  \vho  under  pretense  of 
aiding  the  (iovenimem.  made  their  i  \veniy.  fifty  and  one  hundred 
PIT  cent,  and  ama-sed  larije  for  •,:;,  -  l,y  takim:  a d vantage  of  ihe 
ride  of  u-ar  a-'  it  submerged  a  nation'-  hopes"  p.  j2~. 


152         HISTORY    OF    Till-:    GREAT    AMERICAN    FORTUNES 

are  given  here  for  what  they  may  be  worth.4  But  ii 
should  he  remembered  that  not  the  one-thousandth  part 
of  what  was  going  on  in  the  world  of  capitalism  ever 
found  its  way  into  official  documents.  Reasoning  from 
conditions  prevailing  at  the  time,  it  is  more  than  likely 
that  the  accusations  were  by  no  means  ill-founded. 

YOL'NG  MORGAN'S  ENVIRONMENT. 

In  the  chapters  on  the  Yanderbilt  and  the  Gould  for- 
tunes an  abundance  of  facts  from  the  Government  rec- 
ords  have  been  presented,  depicting  how  every  part  of 
ihe  capitalist  class  was  engaged  in  the  most  gigantic 
frauds  and  swindles  upon  the  Government  during  the 
Civil  War.  To  add  to  this  collocation  would  be  super- 
fluous were  it  not  necessary  to  bring  out  clearly  in  each 
case  the  prevailing  methods,  influences  and  conditions, 
and  to  show  that  particular  acts  were  not  those  of  in- 
dividuals so  much  as  of  a  class.  Peabody  and  the  elder 
Morgan  were  but  following  the  standards  of  their  class, 
the  capitalist  order  of  society,  and  the  lessons  which 

4  Regarding  another  of  Peabody's  transactions,  however,  cer- 
tain definite  facts  are  embodied  in  official  documents.  From 
these  documents  it  would  conclusively  appear  that  Peabody  had 
been  long  carrying  on  methods  somewhat  similar  to  those  thai 
he  was  accused  of  profiting  by  during  the  Civil  War. 

In  1839  the  Chesapeake  and  Ohio  Canal  Company  found  oc- 
casion to  complain  bitterly  of  Peabody's  methods  as  its  finan- 
cial representative  in  London.  The  stock  of  this  company  was 
secured  by  bonds  issued  by  the  State  of  Maryland  as  pledge  for 
its  debt.  Peabody  sold  these  bonds  in  Kur«pe  at  ruinous  dis- 
counts, and  with  large  sums  of  money  belonging"  to  the  com- 
pany in  his  possession,  refused  to  honor  its  bills.  By  this 
pmce>s  he  made  large  profits.  His  excuse  was  the  critical  con- 
dition of  tlu-  European  money  markets.  The  directors  of  the 
company  formally  approved  his  action,  probably  to  let  him  out 
eracrfully.  but  were  glad  to  accept  his  resignation. —  U.  S.  Sen- 
a'c  Documents,  First  Session.  Twenty-sixth  Congress,  1839-40, 
Vol.  viii.  Doc.  Xo.  oio.  This  document  contains  the  full  cor- 
!"<.-'!  'H.'u'nce  between  the  company  arc!  Peabody. 


j.   1'iiiki'uXT   MORGANS  ciiXKSis  153 

young  J.  i'ierpont  Morgan  imbibed  were  those  taught  in 
exemplary  fasliion  by  the  whole  of  the  class.  To  de- 
scribe his  transactions  with  a  precipitate  abruptness  of 
treatment,  while  omitting  a  perspective  upon  his  times, 
would  afford  no  understanding  of  the  molding  forces  in 
operation,  and  would  be  prejudicial  and  without  aim. 

In  every  department  of  business  the  most  persistent 
and  gigantic  frauds  had  long  been  committed  by  capital- 
ists, and  grew  to  enormous  proportions  during  the  Civil 
War.  Xot  only  were  those  rich  bribers  and  defrauders 
secure  from  punishment,  but  they  had  little  difficulty  in 
keeping  all,  or  nearly  all,  of  the  wealth  thus  fraudulently 
acquired,  and  investing  much  of  it  in  other  channels.  It 
is  advisable  to  advert  here  again  to  the  practices  of  that 
large  body  of  importers  who  had  already  acquired  con- 
sequential fortunes,  and  who,  when  Morgan  was  just 
starting  out,  occupied  a  superior  position  as  respectable, 
conspicuous  and  patriotic  "  leading  citizens." 

In-  the  one  prolific  field  of  defrauding  the  Government 
of  customs  dues,  large  private  fortunes  had  already  been 
amassed  by  the  year  1860.  In  preceding  volumes  we 
have  given  instance  after  instance,  particularly  the  enor- 
mous frauds  of  Phelps,  Dodge  and  Company.  But  those 
instances  were  only  a  few  of  an  immense  total. 

A  Congressional  report  in  1850  (Ex.  Documents,  Sec- 
ond Session,  Thirt\-fir<t  Congress.  1850-51.  Vol.  V,  Ex. 
Doc.  Xo.  441  specified  2.002  different  cases  of  fraudu- 
lent undervaluations  on  the  part  of  nearly  as  many  im- 
porters at  Boston.  Philadelphia,  Xew  York  and  Xew  Or- 
leans. Replying  to  a  resolution  of  the  I'nited  States 
Senate  calling  for  a  statement  of  measures  adopted  to 
prevent  frauds  upon  the  revenue,  I*.  S.  Sccretarv  of  the 
I  reasurv  Corwin  reported  i  I  .  S.  Senate  Document?. 
r'irsi  Session.  Thirty-first  Congress.  [(840-50.  Vol.  XI\  . 


154         UIM'ORV    OF    THE    GREAT    AMERICAN    l-'ORTfNEs 

Doc.  Xo.  79 j  that  the  honest  trader  had  no  opportunity 
in  business.  "  All  the  frauds,"  he  wrote,  "  which  can 
be  perpetrated  by  double  invoices  and  false  valuations 
continue  without  abatement.  Honest  merchants  and  fair 
traders  have  been  driven  from  the  business  of  importing 
foreign  merchandise,  being  unable  to  compete  with  the 
dishonest  practices  that  prevail  and  which  our  present 
system  favors.  .  .  .  The  means  at  the  disposal  of 
this  department  are  entirely  inadequate  to  such  an  exam- 
ination of  imports  as  will  effectually  suppress  the  sys- 
tematic frauds  known  to  be  extensively  perpetrated." 

Thirteen  years  later  lulwin  Jordan,  Solicitor  for  the 
United  States  Treasury  Department,  reported  the  same 
state  of  affairs.  Describing  the  custom  house  frauds  at 
Xe\v  York,  he  reported,  on  January  25,  1803,  to  Chase, 
Secretary  of  the  Treasury  (  House  Miscellaneous  Doc- 
uments, Third  Session,  Thirty-seventh  Congress,  1862- 
63,  Vol.  I,  Doc.  Xo.  18),  "  that  frauds  in  the  importation 
of  foreign  merchandise  are  extensively,  constantly  and 
systematically  carried  on.  They  are  effected  in  various 
ways."  One  method.  Jordan  wrote,  was  that  of  consid- 
erable direct  smuggling  of  jewelry,  laces,  rich  silks  and 
other  costly  goods  carried  on  the  person,  often  with  the 
connivance  of  the  revenue  officers.  Jordan  continued: 

Hut  probably,  the  usual  mode  in  which  frauds  arc  committed 
is  by  the  use  of  invoices,  in  which  the  goods  to  which  they 
P.  Sate  are  falsely  described,  or  undervalued.  Sometimes  the 
importer  relie>  upon  the  inability  of  the  revenue  officers  to 
detect  such  false  description  or  undervaluation,  and  sometimes 
upon  his  own  power  by  corruption,  to  induce  them  to  pas?  the 
poods,  with  a  full  knowledge  of  the  fraud.  Experience  has 
proven  that  in  neither  ca-e  is  his  expectation  disappointed  by 
the  result. 

As    to    the    ,'u-ce^ibility    «i    ninny    of    those    employed     in    the 


J.    I'lEKl'O.Vl     MORGANS    GENESIS  155 

custom    house    to    corrupt    intluenees,    the    evidence    is,    I    regret 
to  say,  conclusive  and  startling. 

The  facts  developed  in  connection  with  the  particular  frauds 
before  referred  to  show  that  money,  in  large  sums,  was  received 
by  officials  as  the  undisguised  reward  of  fraudulent  acts  or 
connivance.  But,  in  addition  to  this,  the  statements  herewith 
M'.bmitted  seem  to  justify  the  belief  that  nearly  the  entire  body 
of  subordinate  officers  in  and  about  the  custom  house  are,  in 
one  way  or  another,  in  the  habitual  receipt  of  emoluments  from 
importers  or  their  agents. 

Jordan  reported  (page  6  of  the  report)  that  one  lawyer 
declared  that  he  had  paid  to  a  single  cnstom-house  record 
clerk  the  stun  of  $1800  in  a  period  of  fifteen  months. 
"  Entries  from  the  hooks  of  an  importing  house,  doing 
Imt  a  moderate  husiness,  are  discovered,  showing  that 
about  a  thousand  dollars  had  been  paid  by  it  to  an  ex- 
aminer within  a  period  of  a  year.  It  is  shown  that  a 
bond  clerk,  with  a  salary  of  $1000  per  annum,  enters 
upon  a  term  of  eight  years  with  nothing,  and  leaves  it 
with  a  fortune  of  thirty  thousand  dollars."  Jordan  re- 
ported that  he  thought  the  amount  and  extent  of  bribes 
were  much  larger  than  the  custom-house  orncials  were 
willing  to  admit. 

\Yhat  wa^  set  forth  in  official  reports  as  "  the  notoriou> 
Williams  case."  was  characteristic  of  the  methods  by 
which  fortunes  had  been  thus  acquired.  In  these  official 
reports,  the  firm  of  J.  D.  and  M.  Williams,  wine  im- 
porters of  Boston,  was  described  as  one  of  the  "  olde.-t 
established  "  in  that  cits' ;  its  members  had  grown  verv 
rich,  and  occupied  a  preeminent  station  of  superior  ele- 
gance and  prestige.  They  professed  to  be  deeply  shocked 
and  wronged  when,  in  1865,  Collector  Goodrich  of  the 
i 'on  of  Boston  specifically  charged  them  with  long-con- 
tinned  defrauding  of  the  (lovernment  in  the  importation 


of  sherry  and  champagne.  The  Government  examiners 
and  officials  presented  calculations  showing  that,  by 
undervaluations,  the  firm  had  cheated  the  Government 
out  of  at  least  $150,000  in  duties  ;  that  the  interest  would 
make  the  amount  nearly  $200,000;  and  that  the  value  of« 
the  wines,  since  1846,  liable  to  forfeiture,  would  reach 
about  $2,000,000.  (See  Reports  of  Committees,  Second 
Session,  Thirty-ninth  Congress,  1866-67,  Report  Xo. 

150 

Collector  Goodrich  demanded  of  the  firm  that  it  pay 
$500,000  restitution  to  the  Government  —  a  sum  equiva- 
lent to  double  the  duties  and  interest.  Confronted  with 
the  most  positive  evidences  of  its  guilt,  the  firm  dropped 
its  arrogant  and  injured  attitude.  It  offered  the  Gov- 
ernment $350,000  in  lull  satisfaction  of  all  duties,  fines 
and  forfeitures.  This  offer  was  declined.  Suddenly,  a 
singular  change  came  over  the  custom-house  officials ; 
thev  consented  to  revise  their  calculations  and  recom- 
mend the  settlement  of  the  Government's  claim  for  the 
payment  of  $100.000,  and  that  sum  was  accepted. 

The  result  was  a  loud  public  scandal ;  impatient  curi- 
osity was  popularly  expressed  as  to  why,  after  declining 
an  offer  of  $350,000.  the  Government  had  accepted  $100.- 
ooo.  The  House  Committee  on  I'ublic  Expenditures  in- 
vestigated. Thi-  committee,  on  February  11,  186". 
li.'iiuled  in  t\vo  reports.  Both  reports,  agreed  upon  thi- 
fact :  That  during  the  firm's  negotiations  with  the  ( iov- 
i-rnment,  Samuel  A.  \Yav,  a  prominent  Boston  banker, 
i  Stained  $31.200  from  the  Williams  firm,  whom  he  rep- 
resented in  the  case.  What  did  he  do  with  that  sum? 
['he  three  majority  members  of  the  committee  reported 
that  there  were  strong  indications  that  he  had  bribed 
custom-house  officials  to  agree  to  the  settlement  so  fa- 
vorable to  the  William-  firm.  Rut  as  for  the  complicity 


J.    PIKRl'OXT     MORGAN  S    C.KXKSl.S  157 

of  the  \\  'i11ianu-e>.  ill-:-  majonh  could  not  entertain  the 
suspicion,  it  reported,  that  a  firm  of  such  "  long-unblcni- 
ished  reputation  and  wealth"  (sic)  could  be  a  party  to 
i  raud  and  bribery. 

The  minority  report  of  two  members  ridiculed  that 
of  the  majority.  "  According  to  Messrs.  \Yilliams'  o-.vn 
testimony,"  it  reported, 

Way,  their  agent,  represented  to  them  that  he  must  have 
money  with  which  to  brihe  Government  officials  into  a  more 
favorable  compromise.  .  .  .  And  how  did  these  honorable 
and  persecuted  wine  importers  receive  the  proposition?  Were 
they  shocked  at  it?  .  .  .  Nothing  of  the  kind.  .  .  .  They 
did  precisely  what  might  be  expected  of  men,  who,  for  a  long 
series  of  years,  had  systematically  defrauded  the  Government 
by  putting  false  invoices  through  the  custom  house  by  as  long 
a  continued  a  series  of  perjuries.  They  handed  to  their  agent, 
Mr.  Way,  at  his  request  during  the  negotiation,  the  nice  little 
<um  of  $31,200  ...  to  have  it  used  in  the  bribery  and 
corruption  of  United  States  officers  (page  28  of  the  report). 

The  minority,  however,  thought  that  Way  had  "  pock- 
eted the  money  himself."  In  reading  these  reports  one 
is  inclined  to  conclude  that  the  majority  sought  to  white- 
wash the  firm,  and  the  minority  to  clear  the  custom-house 
officials.  The  firm  had,  it  was  clear,  testified  to  its  guilt, 
and  considerable  testimony  showed  that  the  custom-house 
official-  were  generally  corrupt.  The  minority  report 
ended  by  severely  denouncing  the  firm,  and  spoke  of 
"  the  immense  interest  which  the  foreign  importers  have 
in  breaking  down  every  hone>t  official  who  stands  be- 
tween them  and  the  Treasury."  The  practice  on  the  part 
of  capitali>ts  in  causing  the  removal  of  honest  officials 
who  sought  to  thwart  their  frauds  had  been  long-prevail- 
ing, as  we  have  seen  in  the  cases  ot  John  Jacob  Astor 
and  others. 

\o  criminal  action  wa-  brought  ajiainst  the  William- 


158         HISTORY    OF    TIIK    GKKAT    AMERICAN"    FORTUNES 

linn  ;  the  scandal  was  >oon  forgotten ;  and  they,  like  many 
another  importing  house  profiting  by  such  methods,  re- 
tained their  rank  and  wealth.  Of  the  $100,000,000  or 
thereabouts  invested  in  railroads  by  Massachusetts  capi- 
talists at  that  time,  a  considerable  part  of  the  investment 
was  doubtless  made  by  men  who  had  obtained  their 
wealth  by  defrauding  the  Government  in  customs  dues. 
l.i  recurring  charges  are  any  indication  of  corruption, 
the  officials  of  the  I'niled  States  courts  were  constantly 
corruptly  influenced  or  bribed  to  bring  no  criminal  ac- 
tions against  men  of  wealth,  or  to  cause  cases  finally  to 
be  dismissed,  if  actions  were  brought.  Even  slave  trad- 
ers, the  abominations  and  horrors  of  whose  traffic  shocked 
the  whole  civilized  world,  seem  to  have  bought  immunity, 
and  this,  too.  after  the  Civil  War  had  begun.  Accord- 
ing to  the  Duke  de  Rochefoucault  Liancourt,  who  trav- 
eled in  the  L  nited  States  in  1/95.  "  nearly  twenty  vessels 
from  the  harbors  of  the  United  States  are  employed  in 
the  importation  of  negroes  to  Georgia  and  the  West  India 
Isles."  In  his  "  Travels  "  (Vol.  II.  p.  292,  English  trans- 
lation) the  Duke  further  told  how  the  merchants  of 
Rhode  Island  were  the  conductors  of  what  he  described 
as  the  "accursed  traffic."  I  nited  States  law  prohibited 
die  importation  of  slaves  after  the  year  1808,  and  out- 
lawed the  traffic  as  piracy.  I'm  the  slave  traffic  contin- 
ued, and  large  sums  of  Northern  capital,  particularly  of 
Xew  York,  Spanish  and  Cuban  capital,  were  invested  in 
it.  Slaves  snatched  from  Africa  were  sold  in  the  Span- 
ish colonies  in  America.  "  Spain,"  wrote  Secretary  of 
State  Seward  to  Minister  to  Spain  Koerner.  in  1864,  "  is 
believed  to  ],c  the  only  Christian  country  in  whose  do- 
minions African  negroes  are  now  introduced  as  >laves." 
Spain,  added  Seward,  bad  a  treat v  with  Great  llritain 
i m  the  subiect.  but  disregarded  it. 


J.     I'iMKI'OXT     .M<  )I<c;.\.\   S    GKXKSIS  1 5'J 

From  May  i,  1852,  to  May  i,  1802,  twenty-six  Arner- 
lean  schooners  and  brigs  were  libelled  by  the  Govern- 
ment at  the  Port  of  New  York,  charged  with  being  en- 
gaged in  the  slave  traffic.  Some  were  seized  at  New 
York,  and  others  on  the  coast  of  Africa.  Many  of  these 
vessels  were  condemned.  (Senate  Doc.  No.  53,  Vol.  V, 
U.  S.  Senate  Documents,  Second  Session,  1861-62.)  On 
November  28,  1863,  Seward  wrote  officially  to  Lord 
Lyons  that  a  steamship  had  recently  landed  more  than 
one  thousand  African  negroes  near  Cardenas  or  Sagua. 
Cuba  ;  that  "  very  prominent  and  wealth}'  persons  are  said 
to  be  implicated  in  the  business  "  ;  and  that  it  was  be- 
lieved the  steamer  went  to  Nassau  after  landing  the  ne- 
groes. Under  Spanish  law,  it  was  provided  that  all  Af- 
rican negroes  captured  by  the  Spanish  Government  should 
be  declared  emancipadoes,  and  distributed  among  the 
planters  and  others  for  a  monthly  compensation,  part  of 
which  accrued  to  the  Government.  Put  Thomas  Savage. 
U.  S.  Vice  Consul-General  at  Havana,  in  describing  the 
system,  wrote  to  Seward:  ".  .  .  A  little  gold  ju- 
diciously distributed  among  the  cur  a,  captains  of  the 
district,  etc.,  will  establish  the  fact  |  of  the  negro's  alleged 
decease]  and  the  cinancipado,  so  reported  a>  dead,  re- 
mains a  slave  for  life."  (  U.  S.  Senate  Fx.  Docs.,  First 
Session,  Thirty-eighth  Congress,  1 863-4 14.  Part  II,  Doc. 
No.  48.) 

On  June  19,  1861.  the  bark  .-liu/nsta  was  seized  bv 
I  nited  Stales  Marshal  Robert  Murray  at  Greenpoint. 
Long  Island,  on  the  charge  of  being  Titled  out  as  a 
-laver  to  go  in  Africa,  and  was  condemned.  A  party  of 
capitalists,  headed  by  Appleton  (  >ake>  Smith  and  hi- 
brother,  scions  of  a  well-known  family,  were  financing 
the  expedition.  To  Murray':-  amazement,  the  U.  S.  Di-- 
trict  Attorney's  office  at  New  York  then  allowed  the  ves- 


i6o 


-el  to  be  bonded  for  an  in-igniiicant  ,-um,  and  licen.-ed 
her  to  clear  the  port.  Hastening  after  her.  Murray 
again  seized  the  .hiyusta  at  Fire  Island.  lie  then  for- 
mally and  circumstantially  charged  collusion  between  the 
slave  trade  interests  and  certain  officers  of  the  Federal 
judiciary  at  Xe\v  York.  The  Secretary  of  the  Interior 
subsequently  decided  that  collusion  had  not  been  proved. 
i  ['.  S.  Senate  Docs.,  Second  Session,  1861-62,  Vol.  V, 
Doc.  Xo.  40.  I  Horace  Greeley's  editorials  of  the  day  ex- 
press the  greatest  indignation  at  this  attempted  cheating 
of  justice  ;  the  case  \vas  only  one  of  numerous  such  cases  ; 
main'  a  time  slave  traders  had  succeeded  in  having  actions 
against  them  dropped  or  dismissed. 

\Ye  have  now  seen  how  the  most  successful  capitalists, 
the  founders  of  great  fortunes,  piled  up  their  wealth 
by  unrestrained  careers  of  fraud  and  theft.  \Ye  have 
noted  how  Commodore  Vanderbilt  pocketed  millions  by 
blackmailing  competitors,  and  by  lea.-ing  or  selling  worth- 
less vessel*-  to  the  Government  during  the  Civil  War  for 
exorbitant  sums.  The  facts  have  been  set  forth  how 
a  host  of  other  capitali.-ts  swindled  the  l.'nited  State- 
Treasury  out  nf  hundred-  of  millions  of  dollar-,  and 
hazarded  the  lives  of  the  very  armies  righting  for  their 
cause  by  bribing  Government  officials  to  accept  army 
and  navy  supplies  of  shoddy  clothing,  worthless  tents  and 
blanket-,  good-for-nothing  .shoe.-.,  adulterated,  deleterious 
food,  and  gun-  which  were  frequently  more  dangerou- 
to  the  men  u-ing  them  than  to  the  enemy. 

I-' ven  if  the  supplies  and  equipment  contracted  for 
were  of  payable  quality,  the  Government  was  mulcted 
out  of  extortionate  -urns. 

In  previous  chapters  we  have  had  repeated  occasion - 
to  refer  to  the  huge  Dwindles  which  Mar-hall  (  ).  Robert-, 
one  of  the  foremo-t  and  highly  prized  capitalists  of 


j.    I'IKKPOXT    MoR;:\:\'s    r.KNKSJS  l6l 

those  years,  successfully  worked  upon  the  Government. 

Some  of  the  vessels  that  he  sold  for  transport  service 
were  so  bad  that  one  of  them  foundered  a  day  or  two 
after  leaving  port.  The  erew  of  this  ship  —  the  i'nion 
—  was  alone  saved,  and  barely  so,  at  that ;  the  ship 
and  all  her  armv  stores  were  a  total  loss.  Another  ship 
sold  by  Roberts  was  so  badly  damaged  on  her  first  voy- 
age as  to  be  hardly  able  to  reach  port,  although  not 
without  much  loss  of  freight.  ]'>ut  to  give  a  succinct 
idea  of  the  greater  sums  squeezed  out  of  the  Govern- 
ment for  vessels  for  which  some  fair  degree  of  effi- 
ciency could  be  claimed,  the  case  of  the  steamship 
Illinois  need  only  be  cited.  For  a  few  years'  lease  of 
this  vessel  Roberts  succeeded  in  getting  a  total  rental  of 
$3/0.700,  yet  it  was  appraised  by  a  naval  board  as  worth, 
all  told,  cost  of  construction  and  equipment  included, 
$257,187.  After  the  Civil  War  it  was  returned  to  him 
in  a  much  better  condition  than  when  he  had  leased  it. 
The  transaction  was  one  of  man}-  such  scandals  that 
Congress  deemed  it  wise  to  investigate/"' 

Xeed  it  be*  said,  however,  that  Vanderbilt  and  Roberts 
were  far  from  being  exceptions?  One  of  the  greatest 
frauds  of  all  in  the  extortion  of  large  sums  from  the 
Government  was  Thomas  Clyde,  the  founder  of  the 
C'lvde  Steamship  Line  and  commonly  described  in  bio- 
graphical account^  as  a  capitalist  of  the  greatest  probity. 
According  to  the  court  records,  Clyde,  bv  fraudulent 
representations,  succeeded  in  obtaining  exorbitant  rates 
for  the  lea-ing  of  vessels  for  transport  service.  The 
Government  discovered  his  fraud-  in  time,  and  despite 
his  urgent  remonstrances,  declined  to  pay  the  full  amount 
that  he  claimed. 


hi  the  >uit  tliat  followed  in  the  case  of  the  steamer 
7  allaca,  the  Government  claimed  that  Clyde  was  guilty 
of  a  fraud  ;  that  in  dealing  with  Quartermaster  Fergu- 
son he  had  fraudulently  suppressed  certain  facts  which, 
had  they  been  known,  would  have  prevented  Ferguson 
from  contracting  to  pay  $115  a  day  for  the  vessel.  In 
this  case  the  Court  of  Claims  decided  in  favor  of  Clyde.6 
Cut  in  the  case  of  the  steamer  Rebecca  Clyde,  also  be- 
fore the  Court  of  Claims  in  December.  1869,  the  court 
severely  denounced  Clyde's  claim  as  fraudulent,  referred 
to  the  "  unconscionable  and  exorbitant  rates  of  trans- 
portation." and  to  the  "  injustice  and  extortion  "  of 
Clyde's  claim,  and  dismissed  his  petition.7  In  the  ap- 
peals in  both  cases  the  Supreme  Court  of  the  United 
State-  reversed  both  decisions. 


Such  of  the  successful  capitalists  as  were  not  defraud- 
ing in  many  directions  were  concentrating  schemes  of 
fraud  in  some  one  -pecial  direction. 

The  Stevens  family,  of  Hoboken.  X.  J..  was  one  of 
the  notable  examples.  Thev  were  millionaires  lie  fore  j. 
Pierpont  Morgan  had  outgrown  boyhood;  they  ranked 
high  among  the  leading  capitalists  of  the  country;  and 
by  donations  of  a  part  of  their  fortunes  they  became 
celebrated  as  philanthropists.  The}'  were  the  principal 
owners  of  the  Camden  and  Amboy  railroad,  then  called 
in  Xew  jersey  the  "  Railroad  Monopoly." 

In  the  fifteen  years  before  ]$(io  they  were  the  mo>t 
notorious  corrupters  of  the  Xcw  fersey  Legislature; 
lime  after  time  they  bribed  bills  through,  corrupted  the 
election-  and  the  courts,  ignored  or  evaded  the  laws. 

41  Gum   -if  rinim>.  v  :  1.^4-140.  T  Tliirl..   140-155. 


J.    I'IKUI'O.V!     MORGAN'S    GKNKSLS  l6^ 

and  bled  the  public  by  an  illegal  system  of  transportation 
charges.  That  they  and  Blair  and  other  railroad  mag- 
nates were  continually  debauching  the  Xew  Jersey  Leg- 
islature was  common  understanding,  but  it  was  not  to  be 
expected  that  the  Legislature  would  seriously  investigate 
itself.  In  1855  a  specific  bribery  scandal  inadvertently 
happened  to  become  public ;  the  Legislature  hurriedly 
appointed  a  catechizing  committee  which  made  a  pre- 
tense of  investigation,  and  then  turned  in  a  report  which 
harmed  no  one.8 

The  Stevenses  not  only  had  their  direct,  but  also  their 
indirect,  sources  of  tribute.  One  of  them,  Edward  A. 
Stevens,  a  philanthropist  par  excellence,  was  carrying 
on,  it  seems,  a  species  of  blackmailing  akin  to  that  Van- 
derbilt  employed.  As  the  owner  of  the  Hoboken  Land 
and  Improvement  Company,  Stevens  had  secured  a  fran- 
chise for  a  branch  railroad  line  from  Hoboken  to  Xew- 
ark.  For  many  years,  up  to  1860,  he  compelled  the  Xew 
Jersey  Transportation  Company,  a  competitor  in  that  one 
section  of  the  State,  to  pay  him  an  annual  subsidy  of 
$18,000.  in  order  to  buy  him  off  from  building  the  branch 
line. 

The  Xew  Jersey  Transportation  Company  decided, 
in  1860,  that  it  would  no  longer  pay  this  blackmail 
money.  In  retaliation.  Stevens  bribed  the  Xew  Jersey 
Legislature  to  give  him  a  franchise  to  connect  his  line 
with  the  Morris  and  Lssex  Railroad  in  which  he  held 
a  large  proprietorship.  A  turbulent  scene  en>ued  when 
the  bill  was  pas>ed  on  March  i,  iSbo.  Assemblyman 
Slaight,  of  Hudson  County,  charged  that  an  offer  of 
briberv  had  been  made  to  him  to  vote  for  Stevens'  bill. 


Hi-!         HISTORY    OF    Till-:    CiKL-:.\'J     AMERICAN     L'ORTVNES 

\\'hercupon  Peckbam,  of  the  same  county,  rose  and  an- 
nounced he  had  hcen  offered  by  Stevens'  opponent?  as 
high  as  $3,000  to  oppose  the  bill. 

These  are  but  a  very  few  of  the  many  examples 
of  succcs>ful  capitalists  whom  the  young-  men  were 
taught  to  look  up  to  and,  if  possible,  emulate.  And 
what  were  the  business  methods  of  the  most  conspicuous 
factory  owners  "J.  To  get  an  even  more  correct  focu> 
upon  the  youthful  career  of  J.  Pierpont  Morgan,  it  is  de- 
sirable to  consider  some  of  the  ways  in  which  the  large 
industrial  concerns  were  rushing  into  great  wealth. 

Asa  \\ "hitney  was  one  of  the  important  all-round  capi- 
talists of  the  United  States ;  he  was  a  railroad  projector, 
and  his  firm,  Asa  Whitney  and  Sons,  owned  the  largest 
carwheel  factorv  in  the  land,  lie  was  a  verv  enthusi- 
astic patriot  ;  so  were  they  all.  those  commercial  men. 
brave  in  patriotic  talk.  The  quality  of  their  patriotism 
was  particularly  evidenced  after  John  Brown's  raid  at 
Harper's  Ferry. 

War  between  Xortli  and  South  was  generally  regarded 
as  unavoidable.  The  South  was  busily  preparing. 
What  were  the  Xorthern  factory  owners  doing?  Work- 
ing their  plants  day  and  night  to  supply  the  South  with 
equipment.  In  the  first  months  of  [860  the  Whitney 
works  were  run  to  their  fullest  capacity  to  provide  wheeK 
largely  for  Southern  railroads.  In  the  same  months 
the  Baldwin  Locomotive  Works  of  Philadelphia  turned 
rut  fifty-eight  locomotives,  all  but  four  of  which  were 
for  Southern  railroads.  Bcment  and  Dougherty  and  the 
firm  of  William  Setters  and  Company,  machine  tool 
builders  in  Philadelphia,  were  filling  heavy  orders  for 
Southern  railway  and  machine  shops. 

These  capitalists,  and  all  who  were  doing  as  they  were, 
knew  that  every  indication  threatened  that  this  equip- 


J.    I' IKK  I'D  XT    MOKUAX'S    GEXESIS  165 

ment  would  soon  be  used  in  war  against  the  very  sec- 
tion to  which  they  belonged,  and  for  the  interests  and 
principles  of  which  they  professed  to  be  such  staunch 
adherents.  In  fact,  some  of  them  made  declamatory 
patriotic  speeches  at  the  very  time  when  they  were 
profiting  from  equipping  what  they  knew  would  shortly 
develop  into  an  openly  hostile  people,  intent  upon  sus- 
taining their  purposes  by  armed  force. 

Till-:    DKFR.U'DIXG    OF    IXVENTORS. 

The  Northern  gun  manufacturers  did  the  same;  not 
one  of  them  scrupled  to  fill  Southern  orders.  They  also 
refused,  for  the  most  part,  to  adopt  any  improvements 
or  utilize  any  of  the  numerous  new  inventions.  In  plead- 
ing for  the  establishment  of  more  Government  armories, 
and  foundries,  Representative  Wallace  of  Pennsylvania, 
in  a  speech  in  Congress,  on  February  28,  1863,  said: 

.  .  .  When  we  look  at  the  manner  in  which  our  army  and 
Government  have  been  defrauded  by  peculators,  we  must  shrink 
from  the  idea  of  trusting  to  private  contractors  to  furnish  the 
necessary  means  for  our  national  defence.  Dependence  upon 
private  contractors  for  arms  and  munitions  of  war  is  too  pre- 
cariou.-  and  uncertain  in  all  respects,  as  well  as  too  costly,  upon 
\\liicli  to  re>t  such  an  important  and  vital  interest  of  the  na- 
tion The  improvements  made  of  late  yea'--  in  the  power  and 
destruetivene.ss  of  all  arm>  have  rendered  comparatively  u-e!e-< 
weapons  that  were  deenu-d  the  \  cry  hot,  perhaps  not  more  than 
a  quarter  of  a  century  ago.  .  .  .  |  lu1  interest  of  the  p-iv^tc 
contractor  i>  to  discoura.ee  all  change  in  the  character  of  arms 
which  his  machinery  is  prepared  to  make,  a-  machinery  i^  co-tly, 
and  every  matt-rial  change  nece>>itates  a  corresponding  change  in 
hi--,  machinery  .  .  .'•' 


1 66         HISTORY    OF    THE    GREAT    AMERICAN    FORTUNES 

patriotism  was  not  involved;  that  it  was  simply  "  a  case 
of  business." 

Doubtless  it  was  this  acute  business  instinct  which  led 
them  to  steal  outright  the  patents  for  breech-loading 
gun.-.  According  to  the  conclusions  of  a  Congressional 
committee  on  patents,  the  inventor  of  mechanical  devices 
for  breech-loading  small  arms  and  machine  guns  was 
George  YY.  Morse,  who  took  out  patents  in  1856.  The 
gun  manufacturers  appropriated  his  inventions.  As  in 
the  cases  of  Goodyear  and  many  another  inventor,  Morse 
was  cheated  out.  Thrown  into  the  deepest  poverty,  he 
applied,  in  r8~8.  to  the  Government  for  payment  on  the 
score  of  his  invention.  In  favoring  his  petition,  the 
Committee  on  Patents  reported,  "  He  is  ignored  and 
poor  in  his  declining  years,  and  those  who  have  adopted 
his  inventions  without  remunerating  him  are  rolling  in 
wealth:'  ]" 

In  the  case  of  another  inventor,  C.  D.  Schubarth,  a 
foreigner  residing  at  Providence,  K.  1.,  a  Government 
Commission  reported  these  facts:  that  he  had  invented 
a  new  type  of  gun:  that  in  order  to  raise  the  funds  he 
had  to  take  in  several  capitalists  as  partners ;  that  he 
was  informed  that  to  get  a  contract  from  the  War  De- 
partment, it  was  necessary  to  bribe  one  of  the  United 
States  Senators  from  Rhode  Island;  that  he  was  then 
given  a  letter  of  introduction  to  United  States  Senator 
j.  F.  Simmons  by  the  Providence  firm  of  A.  D.  and 
[.  Y.  Smith  "  a  business  house  of  great  wealth  and  re- 
ability  ":  and  that  he  arranged  to  give  Simmons 
five  per  cent,  of  the  amount  of  the  contract.  Schubarth 
thus  obtained  a  contract  for  50,000  Springfield  rifles; 
according  to  tho  evidence  before  the  Government 


- 


j.   PiKKPovr   MORGAN'S  GENESIS  167 

Commission,  Simmons'  graft  amounted  to  $5O,oou.'"a 
Kverywhcre  in  the  struggle  for  commercial  success 
obtruded  fraud,  theft  and  murder;  one  or  more  or  a 
combination  of  these  methods  constituted  the  means  by 
which  wealth  was  largely  piled  up.  Overwork  and 
criminal  accidents  joined  with  disease  and  want  and 
worry  and  unsanitary  housing  killed  off  myriads  of 
workers  by  sudden  or  lingering  death.  Yet  not  alone 
in  the  factories  and  mines,  on  the  sea  and  in  the  tene- 
ments did  this  scourge  of  death  go  on  as  an  accompani- 
ment of  the  rapid  growth  of  private  wealth.  Out  on 
the  primitive  plains  and  in  the  mountain  fastnesses  whole 
tribes  of  Indians  were  ruthlessly  despoiled,  driven  off, 
and  then,  on  some  pretext  or  other,  slaughtered  so  that 
their  lands  and  the  resources  on  them  could  be  gratui- 
tously seized." 

1"<'1  Report  of  Commissioners  Joseph  Holt  and  Robert  Dak- 
Owen  to  Secretary  of  War  Stanton,  June  21.  1862.  U.  S.  Senate 
Documents,  Second  Session,  Thirty-seventh  Congress,  1861-62, 
Vol.  i.  Doc.  Xo.  64. 

11  These  are  a  few  extracts  from  the  annual  report  of  the 
United  States  Commissioner  of  Indian  Affairs,  1851): 

"  \Ye  have  substantially  taken  possession  of  the  country  Ithc 
Western  Territories]  and  deprived  them  (the  Indian-]  of  their 
accustomed  means  of  support. 

"  Xumbers  of  them  are  compelled  to  sustain  life  by  using  for 
food  reptiles,  insects,  grass,  seeds  and  roots. 

"They  have  at   time-  been  compelled  to  either   steal   or   -tarve. 

"Many  of  the  numerous  depredation-  have  doubtless  been 
committed  by  them  in  consequence  of  their  destitute  and  des- 
perate condition." 

Report  after  report  of  ihe  I'niied  Stale-  Commissioner  of 
Indian  Affairs  showed  that  many  Indian  tribe-  were  in  a  state 
of  absolute  destitution,  and  Congress  was  called  upon  to  pa-- 
appropriations  for  their  -upport.  'Ihe  1'awnees  and  other  tribes 
that  Astor  had  debauched  and  swindled  for  so  long  a  period, 
were  in  a  starving  condition.  Document  Xo.  .7.  United  State- 
on!  Session.  1875.  reveals  that  UritiMi 
had  long  since  introduced  among  the 
IT  Indian  tribes  in  Alaska,  the  me'hod- 
v  A.-tor  of  getting  the  Indians  drunk 


l68         HISTORY    UF    Tiili    GREAT    AMERICAN    FORTUNES 

The  outbreak  of  the  Civil  War  gave  the  mercantile 
class  unsurpassed  opportunities  for  profiting  from  what 
amounted  to  crganized  murder.  However  severe  thi- 
statement  seems,  it  is  in  reality  quite  mild  in  describing 
the  prevailing  practices  of  capitalists. 


PROFITING    FROM    ORGANIZED    MURDER. 

It  would  be  quite  puerile  and  a  poor  extenuation  to 
say  that  they  were  not  fully  conscious  of  the  disastrous 
consequences  to  the  nation  flowing  from  their  acts. 
They  knew  the  baleful  results  to  the  soldiery  of  impos- 
ing fraudulent  army  and  navy  supplies  upon  the  Govern- 
ment. Yet,  spurred  by  the  certainty  of  extortionate 
profits,  they  went  eagerly  ahead,  and  when  their  frauds 
were  discovered,  sought  to  block  every  attempt  at  investi- 
gation. In  the  one  item  of  shoes  alone,  the  shoe  man- 
ufacturers sold  to  the  Government  from  1861  to  1862 
five  million  pairs  of  shoes  for  the  army,  as  to  which 
transaction  a  Government  commission  reported  that  at 
least  $3,000,000  had  been  defrauded ;  that  supplies  of 
shoes  which  were  so  bad  that  thev  could  not  be  sold 
privately  had  been  palmed  off  upon  the  Government.12 

But  the  one  equipment  which  the  army  most  urgently 
needed  wa>  rifles.  \Ve  have  already,  in  a  previous  chap- 
ter, related  how  Marcellus  Hartley  and  other  prominent 
capitalists  swindled  the  Government,  and  imperiled  the- 
I'nion  Army,  bv  importing  the  refuse  of  Fuin>pean  ann,- 
and  unloading  them  upon  the  I'nited  States  Government. 
Also,  we  have  adverted  to  the  fact  that  it  was  greatly 
becau-e  of  the  great  profits  made  in  these  transactions 
that  flartk-v  was  able  to  build  enormous  factorie-  at 


j.  I'lEuroxT  MORGAN  s  GENESIS  iy 

Bridgeport.  Conn. —  factories  that  his  descendants  now 
own. 

J.  Fierpont  Morgan  \vas  profiting  from  the  same  meth- 
ods  at  the  same  time,  lie  was,  in  1861,  a  robust  young 
man.  just  turned  twenty-four  years  old.  "  He  inherited 
from  his  parents."  says  one  of  his  biographers,  "  their 
purity  of  character  and  exceptional  abilities."  1:;  Those 
attributed  lofty  virtues  were  not  in  evidence.  At  a  crit- 
ical juncture  when  the  Union  Government  was  most  in 
need  of  soldiers.  Morgan  chose  not  onlv  to  stay  at  home, 
but  to  profit  from  the  sale  of  worthless  rifles  for  the  arm- 
ing of  the  men  who  responded  to  the  call  to  arms. 

Abraham  Lincoln  was  sending  out  his  proclamations 
calling  for  volunteers.  The  contest  was  a  momentous 
struggle  not  merely  between  sections,  but  between  two 
kinds  of  conflicting  capitalist  institutions.  The  so-called 
common  people  —  the  factory  and  shop  workers,  the 
slum  dwellers,  the  professionals  and  the  farmers  —  he- 
roically poured  in  for  enlistment.  Hundreds  of  thou- 
sands went  forth  to  the  camp<  and  battlefields,  never  to 
return. 

Although  well  qualified  physically  and  mentally  for 
military  .-ervice,  Morgan  avoided  any  kind  of  duty  inter- 
fering with  monev  making  and  comfort.  He  differed  in 
nowise  from  almost  all  the  men  of  position  and  prop- 
erty. They  restricted  their  exuberant  patriotism  ti>  talk 
and  the  waving  of  bunting,  but  took  great  care  to  keep 
away  from  the  /one-  of  personal  danger.  The  rich.  1i>r 
who>e  interests  the  Northern  armies  were  at  basis  fight- 
ing, not  onlv  a-  a  clas<  evaded  enlistment,  but  proceeded 
tn  demoralize,  spread  disahihtv  and  sow  death  among 
their  own  armies.  While  dning  this,  and  at  the  same 
HIT'-  the  (!<>vi.ri  .•:.'.  State-  and  cities  out  of 


I7O         iilSTOKV    OF    Till-:    GREAT    AMERICAN    FORTUNES 

vast  sums  in  army  contracts,  they  caused  the  Draft  Act 
to  be  so  amended  that  it  gave  men  of  property  the  easy 
opportunity  of  escaping  conscription  by  permitting  them 
to  hire  substitutes. 


MORGAN'  S    FIRST    STROKE    OF    BUSINESS. 

J.  Pierpont  Morgan's  first  ascertainable  business  trans- 
action was  in  one  of  these  army  contracts  ;  and  while  it 
was  not  on  so  large  a  scale  as  those  of  older  capitalists, 
it  was  (judged  by  prevailing  capitalist  standards)  a  very 
able  stroke  for  a  young  man  of  twenty-four.  Its  success 
gave  promise  of  much  greater  things  to  come,  in  which 
respect  Morgan's  admirer-  were  not  disappointed. 

In  1857  the  army  inspecting  officers  condemned  a 
large  number  of  Hall's  carbines  as  thoroughly  unservice- 
able, and  as  of  obsolete  and  dangerous  pattern.  The 
Government  thereupon  auctioned  off  quantities  of  them 
from  time  to  time  at  prices  ranging  from  between  Si  ami 
82  each.  Five  thousand  of  them,  however,  still  remained 
in  the  army  arsenal  in  Xew  York  City  and  were  there 
when  the  Civil  War  broke  out. 

On  May  28,  1861,  one  Arthur  M.  Eastman,  of  Man- 
chester, Xew  Hampshire,  made  an  offer  to  the  Govern- 
ment to  buy  these  riiles  at  $3  each.  Knowing  the  great 
frauds  going  on  in  the  furnishing  of  army  supplies,  the 
Government  officials  might  well  have  been  .suspicious  of 
ihis  offer,  but  apparently  did  not  question  its  good  faith. 
The  riiles  were  sold  to  Eastman  at  $3.50  each.  Rut 
either  Eastman  lacked  the  money  for  payment,  or  had 
been  thrust  forward  to  act  as  a  dummy  for  a  principal 
in  the  background.  One  Simon  Stevens11  then  -topped 


j.  I'lEKi'o.vr  .MORGAN'S  GENESIS  171 

on  the  scene,  agreeing  to  back  Eastman  to  the  extent  of 
$20,000,  which  sum  \vas  to  be  applied  for  payment  for  the 
rifles  ;  as  collateral  security  Stevens  took  a  lien  upon  the 
ritles.  But  from  whom  did  Stevens  get  the  funds? 
The  official  and  legal  records  show  that  it  was  from  J. 
1'ierpont  Morgan. 


A    GREAT    SCANDAL    OF    THK    TIME. 

i'he  next  step  in  this  transaction  was  in  Stevens'  tele- 
graphing, on  August  5,  1861,  a  notification  to  General 
Fremont,  commanding  at  St.  Louis,  that  he  had  five  thou- 
sand new  carbines,  in  perfect  condition,  and  inquiring 
whether  Fremont  would  take  them.  From  Fremont's 
headquarters  came  word  to  ship  them  to  the  army  head- 
quarters at  St.  Louis  at  once.  During  all  of  this  time 
the  carbines  had  remained  at  the  arsenal  in  New  York 
City.  Upon  receiving  Fremont's  order,  Morgan  paid  the 
Government  the  sum  of  $17,486  —  at  the  rate  of  $3.50 
a  carbine.  The  ritles  were  shipped  direct  from  the 
arsenal  to  St.  Louis.  And  what  was  the  sum  charged 
upon  the  Government  for  them?  The  bill  made  out  to 

tract-  in  iSoj  reported  to  Congress  that  Simon  Steven--  was  one 
of  a  clique  involved  in  custom-house  fraud-.  Hefore  1850.  the 
New  York  Collector  of  the  Port  had  employed  the  laborers  and 
eartmen  in  the  appraiser's  -tore  to  haul  good-  to  the  Govern- 
ment honded  warehouses.  In  Augu-t.  1850.  Collector  Schell  (a 
corrupt  Tammany  politician)  made  a  contract  by  which  the  haul- 
ing was  turned  over  to  some  of  hi-  political  a.-sociates.  They 
were  paid.  !?i -'.3,000  a  year.  "  I'pon  this  contract."  reported 
Chairman  Van  \\yck.  "the  parties  made  from  fifty  to  seventy- 
five  thousand  dollars  yearly."  "I'he  committee  showed  how  the 
contract  had  been  corruptly  ordained,  and  stated  that  Stevens 
had  a  one-eighth  -hare  of  the  profit-.  Stevens  also  caused  any 
of  the  custom-house  clerk-  who  -aid  anything  against  the  con 
tract  to  he  remo\  ed  from  office.-  The  Congressional  Globe, 
Third  Session.  Thirty-seventh  Congress,  iS6_'-o^.  Part  II,  Appen- 
dix :  U.S. 


172       HISTORY    OF    THE    CHEAT    AMERICAN     FORTIM.S 

Fremont  called   for  the  payment  of  $22  apiece   for  the 
consignment.15 

This  was  one  of  the  many  army  contracts  popularly 
and  officially  regarded  as  scandalous  in  the  highest  de- 
gree ;  one  of  the  select  Congressional  Committees  of  1862 
lost  no  time  in  the  investigating  of  it.  After  making  a 
full  inquiry  this  committee  reported : 

Thus  the  proposal  actually  was  to  sell  to  the  Government  at 
$22  each  5. OCK>  of  its  own  arms,  the  intention  being,  if  the  offer 
\vas  accepted,  to  obtain  these  arms  from  the  Government  at  $3.50 
each.  It  i<  verv  evident  that  the  verv  innds  with  which 


15  Reports  of  Committees,  Second  Session,  Thirty-seventh 
Congress.  1861-62.  Vol.  ii  :  Ixiv-lxxli. 

The  frauds  at  Fremont's  headquarters,  at  St.  Louis,  were 
particularly  enormous.  Major  McKinstry,  quartermaster  of  the 
LT.  S.  army  at  that  place,  was  tried  by  a  conrtmartial  on  sixty- 
one  specifications  of  corrupt  practices,  and  was  found  guilty  on 
twenty-six.  The  testimony  showed  the  gros.-e.-t  frauds,  by  col- 
lusion, in  all  kinds  of  army  supplies.  The  Morgan  rifle  trans- 
action, however,  was  not  brought  out  in  the  specifications.  Mc- 
Kinstry was  discharged  from  the  army. —  House  Reports.  Com- 
mittees and  Court  of  Claims,  Third  Session,  Thirty-seventh  Con- 
gress, 1862-63,  Report  No.  49:  1-24. 

That  the  bribery  of  certain  Union  officers  was  a  fact   wa-  re 
vealed  by  this   communication  sent  by  Major-General    Frederick 
Steele,    on    July    26,    1864,    from    Little    Rock.    Ark.,    to    Major- 
General    F.    R.    S.   Canby,  commanding   the   Military    Division   of 
West   Mississippi: 

"General:  Your  communication  in  regard  to  bribery  among 
the  officers  of  my  command  is  just  received.  If  bribe.-  had  been 
taken  it  must  have  been  by  agents.  I  am  satisfied  that  the  of- 
ficers know  nothing  about  it.  General  Marcy.  Inspector-General, 
i-  at  Fort  Smith  investigating  the  matter.  Carr  is  chief-quar- 
termaster of  my  corps  and  a  lieutenant-colonel.  Krig.-Gen.  J 
W.  Davidson  has  slandered  Carr  on  all  occasions.  .  .  .  lie 
could  have  had  affidavits  in  regard  to  the  corruption  of  his  own 
di-hui>ing  officers  if  he  had  wished  them.  I  have  seen  such 
affidavit-.'  —House  Miscellaneous  Documents.  Second  Session, 
Fifty-.-econd  Congress,  iS<;j  <>i  (Rebellion  Record  Series  1,  Vol. 
xli>"  p.  4° i- 


Lo 


The  committee  further  reported  that  the  rifles  were 
so  bad  that  it  was  found  that  they  would  shoot  off  the 
thumbs  of  the  very  soldiers  using  them.  But  not  only 
did  the  Government  condemn  the  transaction  as  a  bare- 
faced swindle;  .Marccllus  Hartley,  himself  a  dealer  in 
arms  and  a  self-confessed  swindler,"  had  declared  before 
the  committee,  "  1  think  the  worst  thing  this  Govern- 
ment has  been  swindled  upon  has  been  these  confounded 
Mail's  carbines."  lt;  The  Government  refused  to  pay 
Morgan  the  $22  demanded  for  each  of  the  five  thousand 
carbines,  whereupon  Morgan  pressed  his  claim.  Thus 
it  was  that  the  case  of  J.  Pierpont  Morgan  vs.  The  United 
States  Government  came  into  the  public  records.  It 
figured  as  case  Xo.  (;/.'"  To  adjudicate  this  claim,  as 
well  as  man}'  other  similar  claims,  the  Secretary  of  War 
appointed  a  Commission  composed  of  J.  Holt  and  Rob- 
ert Dale  Owen,  son  of  the  famous  Robert  Owen. 

Reporting  on  July  i,  i86j,  this  commission  stated  that 
one  hundred  and  four  cases,  involving  demands  upon 
the  National  Treasury  to  the  extent  of  850.000,000  had 
been  referred  to  it,  and  that  it  had  cut  out  $17,000.000 
of  claims  as  extravagant  and  fraudulent. 1V  In  passing 
upon  Morgan's  claim  it  declared  that  General  Fremont 
had  no  authority  to  contract  for  the  rifles,  but  that  it. 
the  committee,  recognized  a  legal  obligation  on  the  part 
oi  the  Government  arising  from  the  fact  that  the  arms 
passed  into  the  service  of  the  armv.  As  the  best  wav 
out  of  a  bad  bargain  it  decided  to  pay  Morgan  at  the 


T/4         HISTORY    OK    THIC,    r.KKAT    AMF.KH'.NX     KOKi  I'Xl.S 

rate  of  $13.31  a  carbine,  and  it  pointed  out  that  even  at 
this  price  Morgan  and  Stevens  stood  to  make  $49,000 
above  the  price  at  which  the  rifles  had  been  sold  to  them 
by  the  United  States. iy  Under  this  ruling  a  total  of 
$55,550  was  paid  to  Morgan  by  the  Government,  which 
sum  was  accepted  on  account  only. 

This  settlement,  however,  was  not  satisfactory  to  the 
claimants;  the  full  pound  of  blood  was  demanded.  Suit 
was  brought  in  the  Court  of  Claims  at  Washington  for 
$58,000  more.  This  time  the  case  was  entitled  Simon 
Stevens  vs.  The  United  States  Government.20  In  the 
statement  of  the  case  before  the  court  the  fact  wa.-^ 
emphasized  that,  according  to  the  Government,  the  car- 
bines had  been  inspected  and  pronounce:!  unserviceable 
by  the  Government  ordnance  officer.  In  delivering  his 
decision  Judge  Peck  said:  "  By  an  arrangement  between 
Stevens  and  one  J.  Pierpont  Morgan  the  voucher  for  the 
first  two  thousand  and  five  hundred  carbines  delivered 
was  to  be  made  out  in  the  name  of  Morgan,  which  was 
done  ;  the  said  voucher  was  signed  by  1;.  I.).  Cadwallader, 
Captain  of  Ordnance,  United  States  Army,  and  was  for 
the  sum  of  $55,550.  By  further  arrangement  this 
voucher  went  into  the  hands  of  Messrs.  Ketclmm,  Son 
and  Company."  This  voucher  was  paid  on  or  about 
September  ro,  1861.  The  other  twenty-five  hundred 
rifles,  the  court  said,  had  also  been  received  by  Fre- 
mont."1 

''•'  Ibid.,  ]xxv.  The  Commission  Mated  ilial  there  \vas  a  le.ual 
obligation  on  the  part  of  the  Government  to  pay,  but  that  this 
obligation  arose  not  from  Fremont's  contract,  hui  because  the 
arms  did  pa'-s  into  army  service. 

20  Court   of  Claims   Reports  ii  :  08,  etc. 

-1  Ibid.,  no.  In  ur.iniiny  for  the  Government  the  \\  S.  Assi-t- 
ant  Solicitor  -aid  to  the  court  : 

"The  arnir-  \vere  pnrrbri-  '1  !>v  Arthur  M.  F.aMman,  from  the 
United  States,  at  //.<nv  <:m!  <>u/'-'nili  tlnllars  cucli.  because  they 
had  been  inspected  aid  pronounced  unserviceable  by  the  ord- 


175 

1  hese  arc  the  lacts  as  set  forth  in  unimpassioned  court 
records. 


COTRTS   MAKE  THE  GOVERNMENT   PAY. 

Did  Morgan  and  his  associates  get  their  full  demands 
from  the  Government  ?  They  did.  Judge  Peck  held  that 
when  Fremont  had  agreed  to  buy  the  rifles  lie  had  en- 
tered into  a  contract  which  hound  the  Government,  and 
that  a  contract  was  a  contract.  The  court  took  no 
cognizance  of  the  fact  that  the  worthless,  condemned 
rifles  had  been  represented  as  new,  nor  did  it  consider 
the  fact  that  the  money  with  which  they  had  been 
bought  from  the  Government  was  virtually  Government 
money.  It  gave  Stevens  a  judgment  against  the  Govern- 
ment for  $58,1.75. 

Jt  was  this  particular  decision  which  assured  the  open 
sesame  for  the  holders  of  what  were  then  cynically  called 
"  deadhorse  claims  "  to  collect  the  full  amount  of  their 
swindling  operations.  The  Government  could  now 
plead  itself  defenseless  against  the  horde  of  contractors 
who  had  bribed  officials  to  accept  decayed  ships  and  de- 
fective armor,  worthless  arms  and  shoddy  clothing,  flimsy 
tents,  blankets  and  shoes,  and  haversacks  which  came 
to  pieces,  adulterated  lood  and  similar  equipment  and 
supplies.  As  for  criminal  action,  not  a  single  one  of 
these  defrauders  went  to  prison,  or  stood  any  danger  of 
it;  the  courts  throughout  the  land  were  perennially  busy 
rushing  off  petty  defrauders  to  imprisonment  and  em- 
nance  officer.  They  \verc  sold  by  Ka-tnian  to  the  claimant  for 
twelve  anil  cine-half  d<>llar>  each,  and  the  clni:n:mt  at  once  sold 
to  (ieneral  Fremont  at  t:ci'itty-i:\.'<>  dollars  each.  The  ("lovcrn- 
nient  price  for  ncic  arms  <>t~  this  pattern,  of  i;ood  <]na'i'y  and 
fit  for  service,  was  seventeen  and  one-half  dollars." — [bid..  <>S. 


i/o      HISTORY  OK  Tiir:  (,R;-:.\T  AMERICAN*   FORTUNES 

ploying    the    full    punitive    power    of    their    machinery 
against  poor,  unintluential  offenders.22 

This  was  the  real  beginning  of  J.  Pierpont  Morgan's 
business  career;  the  facts  are  there  immovable  and  un- 
a-sailable  in  the  public  records.  This  was  the  brand  of 
"patriot"  he  and  his  fellow  capitalists  were;  yet  ever 
since,  and  especially  so  to-day,  clergy  and  politicians  and 
-hallow,  obsequious  writers  saturate  the  public  with  myths 
all  designed  to  prove  Morgan's  measureless  benevolence 
and  lofty  patriotism.23 

--  In  reporting  to  Congress,  on  March  3,  1863,  the  House  Se- 
lect Committee  on  Government  Contracts,  after  submitting  its 
great  amount  of  testimony  regarding  the  frauds  on  every  hand, 
concluded  : 

"  Many  frauds  have  been  exposed,  the  Government  relieved 
from  many  unconscionable  contracts,  and  millions  of  dollars 
saved  to  the  treasury.  Yet  it  is  a  matter  of  regret  that  punish- 
ment has  not  been  meted  out  to  the  basest  class  of  transgressors. 
They  to  whom  this  duty  belonged  seemed  sadly  to  have  neglected 
it.  ll'orse  tl:an  traitors  in  arms  are  the  men  pretending  loyalty 
to  the  flan,  iclio  feast  and  fatten  on  the  misfortune  of  the  na- 
tion, li'Jiile  /\/.'nV'/  blood  is  crimsoning  the  plains  of  the  South, 
and  bodies  of  their  countrymen  are  mouldering  in  the  dust. 
The  leniency  of  the  Government  toward-  these  men  is  a  marvel 
which  the  present  cannot  appreciate,  and  history  never  explain." 
—  House  Reports,  Committees  and  Courts  of  Claims.  Third  Ses- 
sion, Thirty-seventh  Congress,  1862-63.  Report  No.  50:47. —  But 
history  can  explain.  It  was  not  to  be  expected  that  the  very 
class  controlling  Government  —  the  capitalist  class  —  was  to  be 
proceeded  against  by  it-  creature. 

-::  For    example,    an    article    entitled    "Cleveland's    Opinion    of 
in    "  McClure's    Magazine,"    i-sue    of    April.    1900.     The 
of  this   article  quotes   Cleveland,   for   several   terms    Presi- 
thc  United  State-,  as  saying  of  Morgan's  conduct  when 
issue  was  under  way  in   1894: 

iw.  to...  that  v.  ith  him  it  was  not  merely  a  matter  of 
an  'it  clear  sighted,  far-seeing  patriotism.  He  was 
^  1" 

bankc  r.  c  mo 
avert  a  peril 
crisis." 


f.    PIERPCNT    MORGAN. 


CHAPTER  VIII 

THE  FLOWERLM;  OF  THE  MORGAN  FORTUNE 

"  Great  is  Mr.  Morgan's  power,  greater  in  some  re- 
spects even  than  that  of  President  or  kings,"  wrote  a  sea- 
soned British  observer  some  years  ago 1  which  fact, 
patent  to  even  the  casual  onlooker,  easily  passes  uncon- 
tradicted.  Who,  indeed,  can  gainsay  its  truth?  Above 
all  forms  of  law  and  functionaries  of  office,  above  the 
highest  representative  bodies  and  tribunals,  above  enact- 
ments and  Constitutions,  supreme  above  eighty-five  mil- 
lions of  American  people,  this  one  man  towers  with  a 
hold  and  grasp  of  power  as  tremendous  as  it  is  por- 
tentous. And  what  has  awarded  him  this  mighty- 
power?  Has  it  come  by  vote  or  wish  of  the  people  or 
by  some  incongruous  provision  of  Governmental  ma- 
chinery ? 

Xay,  none  of  these  things  are  responsible  for  it; 
despite  them  all  it  has  come  about,  and  it  persists  in 
mockery  of  them  all.  Then,  wherein  lies  the  explana- 
tion: Xeed  it  be  told  anew?  The  cause  and  substance 
of  it  all  are  Morgan's  wealth  and  his  dictatorship, 
>hared  with  a  few  others,  of  the  resources  of  the  nation, 
which  ownership  carries  with  it  the  real  ruling  power, 
for  whoso  own  the  mean-  by  which  the  people  must  live 
owns  the  people. 

1  \.  Maurice  Ln\v  in  "  I  hr  Independent,''  issue  of  October 
30.  UK*-1. 

T77 


And  A  [organ  to-day  controls  billions  of  dollars  of  the 
country's  resources. 

MORGAN     THEN    AND    NOW. 

Can  this  Morgan  be  the  same  \vho  started  out  by 
.successfully  palming  off  upon  the  Government  during 
the  Civil  War  five  thousand  of  its  own  condemned  rifles, 
and  at  extortionate  prices?  Is  it  possible  that  the  man 
who  profited  from  arming  the  nation's  soldiers  with  self- 
slaughtering  guns  can  be  the  same  Morgan  whose 
power  to-day  "  is  greater  than  that  of  President  or 
kings"?  Is  the  great,  sublime  patriot  of  these  days,  J. 
Pierpont  Morgan,  the  same  Morgan  who  came  into  col- 
lision with  investigating  committees  during  the  Civil 
War,  and  who  was  practically  denounced  in  the  severest 
language?  Verily,  he  is  the  same  man.  the  identical 
same,  ik'hold  him  in  the  budding  of  his  career,  and 
observe  how  he  began  it:  and  behold  him  now.  glutted 
with  wealth  and  power,  covered  with  honors,  august  dis- 
penser of  benevolence,  the  incarnate  source  of  all  wis- 
dom, financial  and  otherwise,  the  mightv  man  of  com- 
merce and  of  the  arts,  the  idol  of  capitalist  ideals. 

Hetwecn  that  Civil  War  transaction  and  his  present 
sway,  necessarily  there  lies  a  long  category  of  deeds. 
I  ndi~putably  he  began  his  career  with  proofs  of  excep- 
tional brilliance1.  Had  his  first  business  achievement  — 
that  of  the  condemned  rifles  —  been  judged  by  the 
-tandards  of  the  "lower  classes,"  lie  would  have  been 
thrown  into  prison,  or  had  the  soldiers  who  had  to  use 
the  gun-  come  within  his  proximitv.  the1  life,  perad- 
vcntnrc,  might  have  been  shot  out  of  him  then  and 
there.  l>ut  his  o\vn  Hass.  far  from  having  a  remote 
thought  of  abhorrence  or  o-tracism.  admired  his  busi- 


FLOWKRIXG    OF    Till':    .MORGAN"     FORTL'A'  K  I/O, 

tics.-  skill,  mettle  and  audacity,  and  regarded  him  a^  an 
extraordinarily  promising  young  man.  (ireat  things 
were  predicted  for  so  astute  an  novitiate  ;  yet  novitiate 
was  not  the  word  :  the  most  experienced  business  man 
could  hardly  have  done  better  than  did  Morgan  in  that 
famous  ride  sale. 

Moreover,  Morgan  had  other  advantages  which  as- 
sured a  notable  future.  He  had  a  millionaire  father, 
which  was  a  relationship  to  be  trebly  prized  at  a  time 
when  millionaire  progenitors  were  not  so  very  numer- 
ous. The  paternal  advice  and  guidance,  based  upon  a 
protracted  career  in  the  serpentine  channels  of  wealth 
getting,  could  unfailingly  be  drawn  upon.  Additionally, 
J.  Pierpont  Morgan  had  the  backing  of  the  old  man's 
millions  and  prestige,  and  —  what  was  more  important 
—  would  some  day  inherit  those  millions.  All  of  these 
factors  were  infallibly  the  prelude  to  a  glorious  career. 

HE    ATTAINS    "  CXIVKRSAL    RKSPKCT." 

The  respect  of  the  mercantile  and  financial  classes 
for  Morgan's  proved  ability  grew  proportionately  with 
each  new  display  of  his  capacity.  Presently  we  find  a 
contemporary  biographer  saying  of  him:  "Mr.  Mor- 
gan made  himself  universally  respected  as  an  able  finan- 
cier in  iSi'V),  when  he  came  out  victorious  in  a  memora- 
ble struggle  for  the  control  of  the  Albany  and  Susque- 
hanna  Railroad,  which  had  fallen  into  the  clutches  of 
Messrs.  Fisk  and  Gould.  The  contest  was  waged  not 
<  inly  by  litigation,  but  also  bv  force1  of  arms,  and  Gov- 
ernor Hoffman  called  out  the  militia.  Fi-k  was  eventu- 
al! v  dislodged." 

It  had  not  taken  long  for  Morgan  to  arrive  at  the 
point  where  he  was  "  universally  respected."  By  "uni- 


i8o 


vcrsally  "  the  writer  of  tlwt  eulogy  meant  among  Mor- 
gan s  class,  the  opinion  (A  which  was  held  to  be  all- 
inclusive;  that  of  the  workers  was  considered  of  little 
or  no  account,  and  could  always  he  ignored  or  ridi- 
culed. But  what  was  the  real  nature  of  this  railroad 
business  which  made  Morgan  so  "  universally  re- 
spected''? What  great  public  service,  if  any,  did  he 
render?  What  was  the  special  merit  involved  in  his 
overthrowing  of  Gould  and  Fisk,  and  his  getting  control 
of  the  railroad  in  question?5 

Eulogistic  writers  fail  to  give  enlightenment  on  this 
point.  But  what  they  omit,  public  records  supply  to 
some  extent. 

Had  either  (iould  and  Fisk,  on  the  one  hand,  or  Mor- 
gan, on  the  other,  built  the  Albany  and  Susquehanna 
Railroad  or  provided  the  funds  for  its  construction? 
Not  a  mother's  son  of  them.  This  line,  now  a  part  of 
the  Delaware  and  1  ludson  Railroad,  had  been  built  with 
public  funds  drawn  from  the  treasuries  of  Xew  York 
State  and  of  various  counties  and  municipalities  in  that 
State.  At  least  Si  .01:0.000  of  the  $45.000.000  drained 
from  the  public  treasury  in  Xew  York  State  for  the 
building  of  railroads,  had  gone  into  the  construction  of 
the  Albany  and  Susquehanna  Railroad.2 

The  usual  pilfering  processes  marked  its  building: 
large  sums  were  stolen  in  various  forms  of  graft ;  and, 
as  in  the  case  of  the  Eric  Railroad  and  other  railroads. 
the  State  was  cheated  out  of  much  of  its  loans.  Then 
ihe  group  of  capitalists  in  control  watered  the  Albany 


c\i id  Susquehanna's  stuck  aiul  manipulated  it  for  specula- 
tive purpose-  until  tlic\  were  ousted  by  other  capitalists 
who  repealed  their  manipulating  methods  on  a  larger 
scale.  This  railroad's  chief  value,  lay  in  the  fact  that  it 
had  direct  connections  with  the  coal  minin  reions  of 


aiul  Ki.-k.  the  other  bv  f.  Pierponi  Morgan.  The  older 
capitalists  were  amaxed  at  the  sight  of  these  young 
men  audaciously  struggling  for  the  possession  of  a  val- 
uable railroad  system,  in  the  construction  of  which 
neither  set  had  had  any  part  whatever.  Old  Commodore 
Yanderbilt  looked  on  with  a  blended  admiration  and 
envy.  ( jonld  was  but  thirty-three  years  old.  and  Mor- 
gan thirty-one.  Kadi  side  bought  all  of  the  stock  that 
it  could;  (iould  \\ith  the  proceeds  of  his  thefts,  and  Mor- 
gan possibly  with  the  proceeds  of  such  transactions  as 
the  rillc  sale,  for  instance.  Stockholders'  elections  were 
held  amid  scenes  of  the  greatest  disorder,  and  each 
parly  churned  the  election  of  its  own  board  of  directors, 
and  accused  the  other  of  the  grossest  frauds. 

(.June  appropriately  the  contest  went  into  the  courts, 
twenty-one  separate  suits  were  brought  by  (iould  and 
Kisk.  and  a  sheaf  of  injunctions  obtained.  The  Morgan 
partv  fought  back  vigorously.  Hut  so  lonj. 
contest  was  confined  to  the  Xew  V>rk 
i  iould  and  Ki-k  had  the  surely  of  victory, 
was  that  such  Supreme  Court 
(.  'ard< '/( 
chatlels 

Verv  soon  an  edi  lying  Una 
liercely  determined  was  each  -ide 
that  ihe  railroad  was  thrown  int. 


182 

disorganization  and  could  not  be  operated.  After 
spending  a  million  dollar.-  of  public  money  on  its  con- 
strnction,  the  people  were  forced  to  look  on  while  the 
two  parties,  neither  of  whom  had  invested  a  dollar  in  its 
building,  claimed  to  be  its  owners,  and  estopped  the  other 
with  judicial  orders  and  injunctions. 

\\hich  of  the  two  would  come  out  ahead?  The  out- 
come was  doubtful.  Hut  it  did  not  continue  so  very 
long.  Gould  and  Fisk  were  cleverly  entrapped  into  mak- 
ing an  agreement  which  led  to  their  utter  eventual  de- 
feat. The  agreement  was  to  this  purport :  That  inas- 
much as  the  conflicting  parties  could  not  agree,  they  had 
arrived  at  a  mutual  understanding  by  which  they  would 
write  to  Governor  1 'oilman  setting  forth  that  it  had  be- 
come impracticable  to  run  the  railroad,  and  therefore 
requesting  the  appointment  of  a  Stale  official  to  operate 
it  pending  a  new  election  of  directors.  This  communi- 
cation was  sent  to  Governor  Hoffman  on  August  II, 
1869,  and  its  provisions  were  accepted. 

HOTII    SIDES   CIIAKGF.D    WITH    FRAUD. 

In  less  than  a  month  after  this,  separate  elections  were 

held ;    each    side    again   claimed    that    its    directors   were 

elected.      More  suits  followed.     Gould  and  Fisk  charged 

that   Ramsey,  president  of  the  road,  had  illegally  issued 

three  thousand  shares  of  stock  to  the  Morgan  party,  and 

demanded  that  this  issue  be  declared  invalid.     Morgan, 

Samuel    Sloan    and   others   of   the    opposition    retaliated 

charges   diat  Gould   and  Fisk  had   used    force  and 

"rnud.     The    Stale   of    N'cw    York   now   stepped   in,   and 

hi   nigh  ihe    \tlornev  General,  brought  an  action  against 

•'  parties.  The  State  charged  that  both  stockholder-' 
'•-  \vere  illegal,  irregular  and  void;  that  spurious 


votes  !i;nl  been  counted  in,  and  that  otherwise  they  were 
full  of  fraud/'1  The  State  a>kcd  for  an  injunction  re- 
straining both  boards  from  taking  possession. 

1  he  ca>e  came  up  again  in  November.  i8(Hj,  be  fore- 
judge Danvin  Smith  in  the  Supreme  Court  at  R<>che>- 
ter,  X.  Y.  Gould  and  Fisk  found  themselves  ;:;  a  great 
disadvantage.  .In  Xc\v  York  City,  with  their  bought 
judges  on  hand,  thev  could  arrange  for  decisions  in  ad- 
vance, but  in  Rochester  they  were  in  a  territory  where 
the  power  of  competitive  magnates  was  strongly  in- 
trenched. Judge  Smith's  decision  was  wholly  favorable 
to  the  group  of  capitalists  led  by  J.  Pierpont  Morgan, 
and  the  Albany  and  Susquehanna  Railroad  passed  into 
their  control.'1 

This  seems  to  have  been  J.  Pierpont  Morgan's  first 
entry  into  the  railroad  business  in  which  later  he  was  to 
become  so  powerful  a  factor.  Thenceforth,  for  nearly 
thirty  years,  until  the  period  of  organizing  industrial 
trusts  began,  his  chief  undertakings  were  his  banking 
business  and  what  was  called  "  the  reorganization  of  rail- 
road^." 

The  two  things  worked  well  together.  By  means  of 
financial  laws,  corruptly  passed,  the  bankers,  both  in- 
ternatii.nal  and  national,  compelled  the  people  of  the 
I  nited  States,  through  their  Government,  to  present 
them  with  the  fund-  with  which  t<>  buy  up  railroads  and 
iither  forms  of  property."  \\  e  have  already  described 

'•'•  [.;m  -IMJ'-  Reports,  X"e\v  York  Supreme  Court,  i  :  j;oS.  eie. 
T!  •.  ••.  •  • :'  ti  •  ca.-e  i;i  ilu-  tleei~i"',i  frn;uentl.v  refers  to 

"  i !:••  ]>;irt  v  iu-.'iiK-il  i-v  I.  !  "ierp<  'in  MI  iri.:;i :  " 

•  Sre.    i  !:••    iV    .       '<   ''   ill.     -t:iU-  of    >,  •  \\    '.    .r!     \>.   The   Al])any 


1 84 

the  financial  system  prevailing  in  the  L  niied  Staler  dur- 
ing and  immediately  following  the  Civil  War  ;  henv  the 
people  were  taxed  from  Si 8.000.000  to  820,000,000  a 
year  to  pay  interest  annually  to  the  bankers  and  other 
bondholders.  \Ye  have  also  showed  how  the  banker? 
had  laws  passed  by  which  they  could  deposit  their  Gov- 
ernment bonds  in  the  United  States  Treasury  and  receive 
back  the  full  amount  in  currency,  less  ten  per  cent. 

Thus  the  banks  received  a  double  interest ;  often  as 
much  as  six  per  cent,  in  gold  in  annual  interest  from  the 
Government,  and  a  far  greater  amount  in  interest  for  the 
public  use  of  the  currency  which  they  were  gratuitously 
allowed  to  issue  on  the  strength  of  the  deposited  bonds.6 
At  the  same  time,  they  were  relieved  from  paying  taxes 
on  Government  bonds.  Their  profits,  obviously,  were 
enormou>.  averaging  twenty,  fifty,  and  often  one  hun- 
dred per  cent,  in  the  course  of  a  year.  The  law.-  also 
were  so  devised  as  to  insure  them  a  virtual  monopoly 
of  the  currencv  supply  —  an  incalculable  power  in  manip- 
ulating industry  and  the  markets,  and  in  controlling  spec- 
ulation in  stocks. 

In  its  resolutions  passed  at  Militarv  Hall.  Xew  York 
City,  on  October  19.  1829.  the  YYorkingmen's  Party 
had  denounced  the  banker-  as  "  the  greatest  knaves,  im- 
postors and  paupers  of  the  age."  A  violent  tirade  this 
seemed  on  its  face.  but.  in  point  of  fact,  there  wa-- 
hardly  a  banker  in  the  country  who  was  not  c^n-tantlv 

p  pres.e.ntatives.  In  1873  it  \va>  estimated  that  $375.000.000 
of  American  railroad  -counties  were  held  abroad,  chiefly  by  for- 
hankers.  The  Final  Report  of  the  Indu-tria!  Commission 
in  ;</jj  estimated  (see  page  ^04  of  ihai  report  i  tlu-  amount  of 
ihe-e  securities  held  by  foreign  banking  house-  rind  others  abroad 
•  •  •  :  - 1,000,000. 

been  broui'  I  '  In  a  previous  ohapicr  ho\v  th>' 
f'jovi-nimer.t  from  iSd.}  to  1878  had  paid  out  to  national  banks 
M.I  L'i  ••  of  S25J, 8.5.7, 550. 77  as  interest  on  bonds.— House 

incnt.   No    ~-\.   1870. 


KLOWKUING    OF    Till:    MORGAN     FORTL'NIi  185 

ami  criminally  violating  the  law  by  committing-  some 
•-pecies  of  fraud  or  other.  Year  after  year  the  courts 
were  full  of  lawsuits  in  which  this  or  that  banker  \vas 
charged  with  fraudulent  transactions.  There  is  little 
scientific  use  in  describing  Morgan's  career  without  ad- 
verting to  an  illuminative  mention  of  what  other  con- 
spicuous bankers  were  doing,  both  before,  and  during, 
his  time,  liver  and  ever  anew  it  will  be  seen  that  Mor- 
gan was  doing  nothing  more  than  emulating  the  tradi- 
tional practices  of  his  class. 


Perhaps  the  foremost  banker  in  the  United  States  in 
the  first  lour  decades  of  the  nineteenth  century  was 
Nicholas  Riddle,  that  proud  aristocrat  and  founder  of 
a  familv  of  aristocrats.  I  le  was  long  president  of  the 
once  all-powerful  Hank  of  the  United  States,  and  was 
held  up  to  the  whole  country  as  an  illustrious  example  of 
die  position  to  which  any  able  and  well-regulated  youth 
could  attain. 

Vet  he  was  accused  of  being  a  thief,  an  embezzler,  a 
malefactor  in  law.  After  his  retirement  from  the  presi- 
dency of  the  Hank  of  the  United  States,  that  institution 
brought  a  civil  action  against  him  and  the  cashier.  John 
Andrews,  fur  the  restitution  of  $400.000  winch  they 
were  charged  with  stealing  from  the  bank  in  iS^i.  1  !i  - 
theft,  it  was  further  specifically  charged,  was  o  .<••>...'.  1 
bv  fraudulent  entries,  burning  of  vouchers  and  by  oilier 
methods.  1'v  the  time  the  suit  came  up  in  court  in  iS.i  ;. 
Middle  had  died,  but  the  action  was  pressed  against  An- 
drews, lii-  answer  was  a  genera!  denial,  but  fudge  Par- 
sons  decided  that  he  was  convinced  that  the  claim  for 
recovery  wa-  one  \\hich  con!  '.  he  enforced,  and  he  over- 


:.vr  AMKKICAX   i-~oi<Ti:xi-;s 

ruled  Andrews'  demurrer.7  And  to  give  merely  one  in- 
>lance  of  many  instances  of  the  methods  of  powerful 
bankers  during  Morgan's  early  career,  let  us  consider 
the  case  of  Bischoftsheim  and  Goldschmidt.  Thev  it  \vas 
who  loaned  Jay  Gould  the  money  to  pay  fraudulent  in- 
terest on  fraudulent  bonds  in  his  Erie  Railroad  thefts ; 
they  supplied  the  money  to  pay  fictitious  dividends,  and 
when  they  saw  more  profit  in  betraying  him,  they  quickly 
changed  front  and  poured  out  the  8750.000  with  which 
Gould's  directors  of  the  Erie  Railroad  were  bribed  to 
resign. *  By  such  methods  they  heaped  up  great  for- 
tunes ;  when  Goldschmidt  died  a  quarter  of  a  century 
ago  he  left  an  estate  of  $30.000.000. 

LAWS    DRAFTED    FOR    PLl'XDEK. 

But  the  extraordinary  financial  laws  passed  during  the 
Givil  War  were  only  the  forerunners  of  other  laws 
which  the  bankers  and  the  creditor  class  in  general 
caused  to  be  passed  in  following  years,  and  by  which 
they  instantly  and  vastly  increased  their  wealth  and 
power,  and  were  enabled  far  more  effectually  than  ever 
before  to  put  the  screws  upon  the  producing  class. 

The  most  noted  of  these  laws  was  that  passed  by  Con- 
gresj  "H  Eebruary  12.  1^73.  practically  accomplish- 
ing the  demonitization  of  silver  as  a  coin.  This  was 
the  same  Gongre-.-  which,  a-  we  have  seen  in  one  of  the 
chapters  on  the  Sage  fortune,  was  bribed  with  a  million 

7  Parson's    Stlcct    Fruity    Cases   nf   the   First   Judicial    District 

of     IVnn-ylvanin.      1^.44.     ii :  31-63.     Also,     Pennsylvania     llou-e 

Journal.    1^42,    Vol.    ii.    Appendix :  182.     Middle's    theft   has    hee;i 

incidentally    refcmd    to    in    a    previous    chapter,    but    it    stands    a 

I'  ire  extended  notice  here. 

-  !•::•:':•   ,"i     Investigation    of    the    State    of    Xe\v    York.     1870. 
S-  •     :•'-..    >'".'.    Y    •'.    S'a;  '    Assembly    nr.rr.nifnt-:.    1X7?. 
'       :,    M^c     \"o.  08. 


KLOWEKINc;    OK    T  II  K     .MORGAN     KOKTl.'Mi  1  o/ 

dollars  to  pass  an  act  granting  an  additional  subsidy  of 
85,000,000  to  the  Pacific  Mail  Steamship  Company. 
The  demonitization  act  went  through  by  evasion  ;  not  a 
word  was  directly  mentioned  in  it  of  the  demonitization 
of  silver;  few  knew  of  its  purport;  even  the  advocates  of 
bimetallism  voted  for  it.  It  was  one  of  the  most  adroit 
bills  ever  put  through  Congress,  and  it  was  only  after  it 
had  become  a  law  that  its  concealed  provisions  began 
to  be  understood. 

Then  a  terrific  cry  of  rage  went  up  from  the  middle 
class  from  one  end  of  the  country  to  the  other;  the  ex- 
citement was  intense.  In  this  excitement  atid  indigna- 
tion the  working  class  was  persuaded  into  joining,  al- 
though at  basis,  the  workers  were  not  affected  by  this 
law ;  their  exploitation  and  despoilment  had  gone  on 
under  bimetallism,  and  would  continue  without  cessation 
under  monometallism. 

It  was  the  middle  class  which  was  struck  at  hard ;  the 
supply  of  money  was  at  once  contracted,  the  purchas- 
ing power  of  gold  was  enhanced,  and  the  power  of  the 
large  creditor  capitalists  and  banking  institutions  over 
the  small  property  owning  class  was  greatly  augmented. 
This  law  was  passed  at  about  the  same  time  that  the 
first  trust,  the  Standard  Oil  Company,  was  rising  to  give 
the  death  blow  to  the  doctrine  of  free  competition  in 
trade,  and  to  crush  out  the  middleman  in  business.  The 
day  was  a  sorry  one  for  the  long-dominant  middle  class. 

The  middle  class  representatives  in  Congress  and  else- 
where now  began  an  agitation  which  lasted  many  years.'1' 
They  charged  that  the  demonitization  of  silver  had  been 
brought  about  by  the  conspiracy  of  John  Sherman  and  a 


1 88 


few  other  prominent  men  in  Congress,  with  the  financiers 
of  Wall  street  and  Europe.  In  fact,  the  successive  vol- 
umes of  the  "  Congressional  Record  "  of  those  years  are 
full  of  speeches  in  which  this  charge  is  brought  out  over 
and  over  again.  But  the  law  stood :  and  what  was  more 
galling  to  the  middle  class.  John  Sherman,  denounced  so 
bitterly  as  a  traitor,  and  as  a  mercenary  of  the  bankers, 
was  appointed,  a  few  years  later,  to  be  Secretary  of  the 
United  States  Treasury.  From  that  time  on,  the  bank- 
ers, national  and  international,  came  out  more  and  more 
in  the  open  in  direct  dictatorship  of  the  financial  law> 
and  policy  of  the  United  States.  Circumlocution  became 
less  necessary. 

The  great  Government  bond  issue  of  1877,  by  which 
the  bankers  made  colossal  profits,  followed  Sherman's 
appointment.  Before,  however,  referring  to  this  memor- 
able sell-out,  it  will  be  well  to  give  a  passing  glimpse  of 
Morgan's  varied  activities  and  the  nature  of  them. 
Morgan's  first  partnership  was  as  a  member  of  the  firm  of 
Dabney,  Morgan  and  Company,  which  firm,  it  will  be  re- 
called, was  one  of  the  banking  houses  participating  in 
that  noted  Kansas  Pacific  Railway  loan  of  1869.  This 
loan  was  asked  for  from  investors  largely  on  the 
>trength  of  a  three-million-acre  land  grant  in  Kansa> 
and  Colorado,  which  had  been  corruptly  secured  "by  the 
Kansas  Pacific  Railway  Company  from  Congress,  and 
which  was  the  beginning  of  not  one  series,  but  man}' 
-erics,  of  fraud  and  plunder.11''  Morgan  could  claim,  and 
with  justice  so  far  as  current  standards  went,  that  the 
floating  of  this  loan  was  a  "  legitimate  banking  transac- 
tion "  ;  but  the  fact  that  no  banker  declined  to  profit  from 
the  financing  of  enterprises  which  he  knew  began  and 


I-'LOUKKIXG    OF    Til  1C     MOKGAX     FoRTCXK  l8<) 

continued  in  corruption  an»l  Dwindling,  gives  a  very  clear 
idea  of  tlie  (|tialitv  of  the  assumed  morals  and  ethics  of 
the  capitalist  class. 


THI-:  GRF\T  r.oxo  issrr.  OF  1877. 

Morgan's  next  partnership  was  as  a  member  of  the 
firm  of  Drcxel,  Morgan  and  Company.  lie  began  to  be 
conspicuous  in  very  large  transactions.  One  of  these 
was  the  floating  of  the  $260,000,000  L.  S.  Government 
bond  issue  of  1877.  Avoiding  plunging  into  detail, 
which  would  be  intricate  at  be>t,  suffice  it  to  say  that  this 
bond  issue  was  generally  regarded,  and  not  without  full 
reason,  as  one  of  the  verv  worst  cases  that  had  ever 
been  known  of  the  people  being  betrayed  over  to  a  few 
bankers.  The  selling  of  the  bonds  was  apportioned 
among  these  banking  houses :  August  Belmont.  the 
Rothschilds,  J.  and  \Y.  Seligman  Brothers,  and  Drexel. 
Morgan  and  Company,  the  last  named  acting  for  them- 
selves and  for  the  firm  of  J.  S.  Morgan  and  Company 
in  London.  This  syndicate  at  once  sold  the  bonds  at  an 
advance  of  from  one  to  four  per  cent,  above  the  price 
which  they  had  paid  to  the  Government.  The  profits 
of  the  syndicate  reached  into  the  tens  of  millions  of  dol- 
lar.-. Drexel,  Morgan  and  Company  alone  were  credited 
with  "making"  a  clear  profit  of  $5,0x30.000.  Their 
function  consisted  in  nothing  more  or  less  than  acting 
as  licensed  speculative  middlemen  for  a  Government 
which  could  have  disposed  of  the  bonds  without  inter- 
mediaries. Moreover,  the  participating  bankers  were 
able  to  get  the  bonds  for  them>el\vs  at  "  bargain  prices." 
and  then  through  associated  national  banks,  carry  on  the 
familiar  practice  of  exacting  double  interest  —  one  in- 


F  90 

tcrest  from  the  Government,  and  another  for  the  u>e  ot 
currency  issued  on  the  basis  of  those  same  bond-.11 

These  transactions  comprised  obviously  but  a  few  of 
Morgan's  varied  activities  in  the  decades  following  the 
Civil  War  ;  it  can  be  well  understood  that  he  was,  at  the 
.-ame  time,  engaged  in  a  mass  of  purely  private  btisine-- 
dealing?,  of  which,  no  details  ever  became  public.  Even 
of  his  public  trail:"- actions  the  fact-  as  set  forth  in  the 
public  records  are  more  indications,  than  actual  and 
complete  account.-,  of  the  underlying  circumstances. 
The  financiers  and  business  men  had  everv  motive  for  en- 
shrouding their  affairs  in  the  greatest  secrecy,  particu- 
larly when  tho-e  affair-  in  any  way  related  to  the  divert- 
ing of  Government  functions  for  their  ends,  or  had 
to  do  with  the  suspicious  passage  of  partial  laws  or  the 
violation  of  laws.  The  motto  of  the  whole  commercial 
class  was  to  keep  the  public  in  the  dark  as  much  as 
possible:  and  even  when  the  usual  legislative  investigat- 
ing committees,  fortified  by  summary  power-  of  la\v. 
mildly  -ought  to  ascertain  the  surface  facts  onlv,  with- 
out probing  too  dee]),  they  were,  as  a  rule,  obstructed 
at  every  turn. 

Such  facts  as  did  become  public  came  out  adventi- 
tiously despite  every  effort  of  the  magnates  concerned 
to  hu.-h  them  up.  Sometimes  embittered  competitor- 
would  supply  revelations  to  investigating  committee- : 
«m  other  occasions  the  magnates  would  seek  to  cheat 

MThf  scandalous  circumstances  of  this  bond  i.—ue  made  a 
lively  stir  throughout  the  country  and  aroused  warm  dehatr> 
in  Oingre??.  On  January  24.  1870.  the  l.nitvd  Stat>\-  Sena'e 
pa-sed  a  resolution  calling  upon  Sherman.  Secretary  of  the 
Treasury,  for  information  as  to  tin-  alleged  payment?  of  double 
interest  in  regard  to  moneys  rcceiv  d  by  bank-  and  sy:vi:  •:!'••  - 
for  bond-  lr,  i<i<,r  a!l<>\ved  to  remain  <  :\  depo-it  uith  national 
bank-  pending  the  call  f <  >r  'lie  bond-.— Ste  Senate  E\ccutivt* 
iment.  \"o.  <.,  i ^'t. 


10.1 

one  another  in  the  division  of  the  spoils  or  overreach  at 
the  other's  expense,  and  then  the  quarrel  would  be 
thrown  into  the  courts  and  some  salient  facts,  at  least, 
revealed.  The  point  cannot  be  too  strongly  emphasized 
that  for  every  one  charge  of  crookedness  and  corrup- 
tion that  investigating  committees  and  public  officials 
made  against  capitalists,  a  hundred  such  charges  were 
specifically  brought  by  capitalists  themselves  against  their 
own  kind ;  a  fact  overabundant!}-  attested  in  the  vol- 
uminous court  records  from  the  very  beginning  of  the 
United  States  Government  down  to  the  present. 


Had  it  not  been  for  a  row  between  various  magnate- 
in  a  transaction  in  which  William  H.  Yanderbilt.  j.  Pier- 
pont  Morgan  and  other  capitalists  were  engaged,  and 
the  consequent  wrangling  in  the  courts,  certain  facts  per- 
taining to  another  of  Morgan's  feats  could  not  be  now 
ascertained.  In  one  of  the  chapters  on  the  Yanderbilt 
fortune1-  it  has  been  brought  out  how.  in  1870,,  Morg;.n 
formed  a  svndicate  to  buy  two  hundred  and  fifty  thou- 
sand shares  of  Xew  York  Central  stock  from  William 
11.  Yanderbilt.  and  how  further,  this  stock,  bought  at 
120.  was,  after  a  magical  process  of  manipulation  in  the 
Xew  York  and  London  stock  markets,  sold  at  I  ^o. 
thereby  yielding  the  syndicate  an  immense  profit. 
"Thi<,"  wrote  a  biographer,  "gained  for  Mr.  Morgan 
the  confidence  of  Mr.  Yanderbilt.  who  intrusted  him 
in  1X85  with  the  task  of  adjusting  the  difficulties  be- 
tween the  Central  and  West  Shore  roads." 

Morgan,  however,  did  not  need  to  solicit  anybody's 
"  confidence  "  ;  he  was  a  truculent,  aggressive  financier. 


10,2         HISTORY    OF    THE    r.UEAT    AMERICAN     FORTl'XES 

with  a  dominating,  even  fierce,  personality,  and  wit', 
great  power  in  his  own  field,  that  of  banking.  His  min<; 
was  of  that  resolute,  masterful  order  declining  to  be 
balked  by  any  man  or  set  of  circumstances,  and  his 
methods  were  not  distinguished  by  delicacy.  "His 
method  of  treatment  is  drastic,"  wrote  this  same  bi- 
ographer of  his  railroad  organizations,  "  and  the  holders 
of  junior  securities  have  made  many  a  wry  face,  but  the 
method  has  seemed  to  be  efficacious.  From  Si. 000,000 
to  83.000.000  is  generally  put  down  as  the  commission 
for  reorganization  going  to  the.  house  of  ].  P.  Morgan 
and  l'ompany,i:;  for  knowing  how  to  do  it  and  doing  it." 
Between  these  lines  can  be  legibly  read  the  nature  of 
Morgan's  "efficacious  "  methods;  they  will  be  still  more 
illuminated,  by  force  of  his  own  words  and  acts,  further 
on  in  this  narrative. 

Contrary  to  the  description  so  widely  and  continu- 
ously disseminated,  many  capitalists  are  not  men  of 
personal  courage,  in  the  sense  of  standing  up.  man  to 
man,  and  verbally  "  having  it  out."  as  the  vulgar  phrase 
goes.  The  cunning,  cupidity,  turpitude  and  treachery 
so  impregnated  in  business,  and.  in  fact,  the  foundation 
of  successful  business,  breed  both  a  physical  and  moral 
cowardice.  Well  able,  as  they  are.  to  fight  their  combats 
through  lawyers,  most  capitalists,  by  reason  of  a  certain 
degeneracy,  lack  the  faculty  of  exercising  a  strong,  di- 
rect, personal,  virile  influence  over  men,  such  as  a  fight- 
ing pirate  captain  of  the  old  days  held  over  his  band. 
Morgan  has  been  one  of  the  few  exceptions,  t  nited 
v,  ith  his  wealth  there  has  been  in  him  a  powerful  belli- 
cose  personality,  a  tremendous  vitality  both  of  mind  and 
phv-ique  :  a  man  who  could  impose  his  will  by  sheer 


brute  strength  a>  well  as  by  reasoning:  who  could  con- 
vince by  argument,  and  if  necessary,  bulldoze  and  ter- 
rorize. 

Such  a  combination  allied  with  wealth  and  education 
(for  he  was  college  bred)  and  a  complete  knowledge  of 
all  the  tricks  of  the  trade,  was  bound  to  prove  invincible, 
or  almost  so.  His  very  appearance,  arising  from  an  un- 
fortunate facial  disfigurement,  added  to  his  forceful  ap- 
pearance, and  to  the  terror  which  he  inspired.  Xot  inap- 
propriately did  he  name  his  yacht  The  Corsair:  he 
was  a  modern  embodiment,  in  a  present-day  guise,  of 
some  antique  corsair,  the  qualities  simply  being  trans- 
posed for  adaption  to  new  conditions. 

r.RKAT     MAC.X.  \TF.S    VIF.I.D    TO     HIM. 

Instead  of  having  to  squirm  himself  into  Yanderbilt's 
confidence,  he  compelled  that  haughty  magnate  to  come 
to  terms.  This  fact  Morgan  himself  testified  to  in 
the  suit  arising  from  Yanderbilt's  South  Pennsylvania 
railroad  project — a  transaction  which  has  been  de- 
scribed heretofore.  This  litigation,  it  will  be  recalled, 
sprang  from  Vanderbilt's  building  a  parallel  line  to  com- 
pete with  the  I'enn-ylvania  Railroad.  Morgan,  it  was 
true,  had  acted  as  \  anderbilt's  financial  agent,  but  he 
also  had  heavy  interests  in  the  Pennsylvania  Railroad. 
and  his  banking  hou-e  represented  large  foreign  holding 
interests  in  that  line.  Above  all.  he  was  on  the  sharp 
lookout  for  tlie  interests  of  |.  Pierpont  Morgan. 

How  did  he  force  Yandcrhilt  to  .-ell  hi-  South  Penn- 
sylvania !nu-  to  the  Pennsvlvama  Railroad.'  In  an  ex- 
amination, on  !  Vcembcr  13.  iSS;.  before  Kxaminer  John 
II.  Weiss  in  the  federal  Court  at  Philadelphia,  he  re- 
lated that  when  he  returned  from  Kurope  in  |nne.  iSS;, 


194          HISTORY    01-'    THF,    CRKAT    AMF.KU'AX     FORTl'XF.S 

lie  "  became  satisfied  that  something  should  be  done  to 
bring  more  harmony  among  the  trunk  lines."  and  he 
added  that  he  believed  that  "  sufficient  pressure  could  be 
brought  on  Mr.  Vanderbilt  to  induce  him  to  sell  out." 
Of  the  specific  nature  of  this  "pressure,"  no  explana- 
tion was  given,  but  those  familiar  with  the  immense  co- 
ercive power  of  the  Pennsylvania  Railroad,  and  the 
power  of  Morgan's  bank,  and  that  of  his  correlated 
banks,  were  not  in  doubt  as  to  its  significance.  The 
treaty  of  peace  between  the  warring  magnates  was 
finally  made  aboard  Morgan's  yacht.  \Yhat  was  Mor- 
gan's part?  To  use  his  own  language,  he  "  bought  from 
the  South  Pennsylvania  and  sold  to  the  Pennsylvania." 
What  his  rewards  as  arbiter  were  was  a  fact  not  made 
public:  we  can  conjecture  that  his  bill  was  no  slight 
one.  This  treaty,  like  all  such  agreements,  was  made 
only  to  be  broken  ;  the  Reading  Railroad  which,  under 
the  pact,  was  to  be  indemnified  for  certain  property, 
claimed  that  it  was  cheated  ;  hence  the  suit. 

Up  to  this  time,  that  is  to  say.  1886,  Morgan  had 
figured  little  as  a  railroad  magnate;  his  conspicuousness 
was  more  that  of  a  powerful  banker  who  made  a  spe- 
cialty of  reorganizing  railroads.  Let  it.  not  be  supposed 
that  the  term  "reorganizing"  comprehended  the  under- 
taking of  expensive  improvements  in  the  physical  layout 
and  operation  of  railroads  ;  the  introduction  ol  safer  ap- 
pliances and  equipment,  and  the  minimi/ing  of  danger 
id  pas>engers  and  1o  railroad  workmen. 

Reorganization  included  none'  of  these  things;  there 
\vas  not  a  railroad  corporation  in  the  country  which  did 
not  violently  contest  the  passage  of  laws  requiring  safety 
apparatus,  and  which  did  not  violate  such  laws  as  were 
finally  parsed  ;  progressively,  the  yearly  death  rate  of 


FLO\\  i.Ki  \<;  OF  -I'm-:   M OKI, AN    FOKTI  NIC  n^ 

passengers  and  railroad  employes  increased."  Tlic 
profits,  in  the  form  of  dividends,  came  not  only  from  a 
series  of  extortions,  but  from  the  slaughter  of  a  greater 
number  of  men,  women  and  children  than  were  killed 
in  the  worst  wars  that  the  civilized  (or  rather,  uncivil- 
ized,) world  has  known.  The  "  reorganizations,"  so 
called,  were  not  intended  to  change  these  condition- ; 
their  sole  purpose  was  to  put  the  railroads  in  a  position 
where  profits  would  be  assured,  no  matter  at  what  pub- 
lic expense  or  at  what  cost  of  life.  After  a  railroad 
had  been  grabbed  and  thrown  into  bankruptcy  by  succes- 
sive crews  of  capitalists,  a  reorganize!",  such  as  Mor- 
gan, would  step  in,  compel  the  creditors  to  settle  at  his 
own  terms,  force  the  small  stockholders  to  consent  t<> 
some  new  arrangement  of  stock,  and  issue  new  securities 
to  be  sold  in  Furope  or  America.  In  brief,  a  "reor- 
ganization "  consisted  in  scaling  down  the  debts,  or  sum- 
marily expunging  them,  and  in  devising  new  plans  bv 
which  the  profit  <  would  be  greater. 


For  doing  this.  Morgan  was  hailed  a<  a  man  of  won- 
derful constructive  acumen  —  a  financier  <>i  tir>t-rate  or- 
der. Frequently,  however,  as  we  >hall  see,  the  small 
stockholders  did  not  share  this  opinion;  and  occasion- 
ally they  forgot  their  expected  gratitude  so  far  as  to 

1 '  The  mimher  of  railroad  employes  killed  nr  injured  in- 
creased from  jj.noo  out  of  a  t<aal  of  704,7.4.;  in  service  in  iKx). 
to  <)J.  i/tf  of  a  total  of  i.<>7_M>74  employed  in  11)07 — an  in 
croa.se  from  3,u  per  cent,  in  iS8<)  to  5.51  per  c.  •  t.  in  1-107.  From 
iS8S  to  KKJ7  not  less  than  5^.040  euijiloyi.  •>  were  ki-'ed  while  at 
work,  and  mure  than  Sc.o.i'o.i  employes  were  either  maimed  or 
crippled.  These  figures  have  been  compiled  from  the  annual 
reports  of  the  Interstate  Commerce  Commission. 


I  (JO 


charge  him  in  court  with  fraud.'-"'  This  was  Morgan's 
great  role  for  many  years  :  as  a  reorgani/xT.  not  as  a 
proprietary  railroad  magnate.  The  great  railroad  po- 
tentates of  the  period  np  to  i88<)  were  the  Yanderbilts, 
<  ionlds,  Sage,  Blair  and  Iluntington.  They  were  the 
men  recognized  in  Congress  as  the  lords  of  the  railroad 
systems,  which  fact  is  patent  from  a  scrutiny  of  the 
Congressional  Record."  in  which,  with  great  abun- 
dance, recur  word}'  denunciations  of  them  for  gross  cor- 
ruption and  for  consecutive  violation  of  laws.  Mor- 
gan's name  was  not  mentioned  in  the-e  accusations. 

Cut  it  was  not  long  before  Morgan  came  to  the  front 
as  one  of  the  foremost  railroad  magnates  in  the  I  nited 
States.  His  aggressiveness  of  character  and  action,  his 
truculent  boldness  in  smashing  down  obstacles,  his  con- 
tempt for  artificial  restraints  of  law.  his  disregard  of 
public  opinion,  and  hi-  knowledge  of  how  to  applv  power 
where  it  would  produce  the  best  results  —  all  of  the<e 
qualities  and  capacities  were  the  very  ones  needed  at 
that  precise  time. 

Till-:    CAMPAIGN    AOAINST   THE    MAGNATES. 

A  troublous  time  the  railroad  and  industrial  magnate- 
were  having.  It  was  the  period  when  the  middle  clas>. 
in  its  fury  at  being  on  the  verge  of  overthrow,  was  most 
active  in  having  all  sorts  of  anti-trust  legislation  passed 

ir' For  example:  In  the  case  of  the  Toledo  Railway  and 
I'en  inal  Company,  the  Ohio  Savings  Bank  and  Trust  Com- 
pany :':lrd  a  petition  in  the  i-Yderal  Court  at  Toledo.  Ohio,  on 
August  5,  1007.  averting  that  fraud  had  been  used  in  connection 
with  the  -ale  of  that  road,  and  charging  collusion  between 
Morgan  and  other  railroad  magnates.  By  this  collusion,  it  \va- 
alleged,  an  agreement  had  been  reached  by  which  the  property 
\va-  sold  at  a  low  figure  through  (he  smothering  of  competitive 
bidding,  and  that  this  had  been  done  to  defraud  unsecured  cred- 
itors. The  petition  was  overruled. 


This  cla;-s  was  obdurately  determined  to  keep  things  as 
they  were.  On  the  other  hand,  the.  great  magnates,  in 
line  with  the  momentum  of  modern  economic  forces, 
were  being  forced  into  effacing  the  middleman  in  every 
direction,  and  in  centralizing  ownership.  The  middle 
class  had  the  number  and  traditions  ;  the  magnates  had 
the  money  and  the  power;  as  for  the  working  class, 
despite  its  strikes,  it  was  merely,  in  the  long  run,  a 
pawn  in  the  combat.  The  Standard  Oil  Company  had 
built  tip  its  power  largely  by  reason  of  the  secret  railroad 
rebates  and  discriminations.  If  a  drastic  law  could  1:^ 
passed  against  the  railroads,  the  middle  class  argued, 
the  rising  trusts  would  receive  a  fatal  quietus  —  a  futile 
kind  of  reasoning,  but  one  .sincerely  believed  in  at  the 
time  and  for  a  long  time  afterward.  The  great  aim 
of  the  middle  class,  therefore,  was  to  get  through  Con- 
gress a  strict  interstate  commerce  law,  such  as  would, 
under  heavy  penalties,  forbid  rebate  giving  and  railroad 
pooling. 

The  Congressional  sessions  of  1884.  1885  and  1886 
were,  to  a  great  extent,  occupied  with  long  debates  over 
this  proposed  law.  The  middle  class  was  quite  sure  that 
it  was  the  victor.  Senator  followed  Senator,  Represent- 
ative followed  Representative,  in  arraigning  the  railroad 
magnates.  ]f  speeches  signified  anvthing  these  mag- 
nates were  alreadv  on  the  highroad  to  defeat  and  to 
prison.  Senator  Van  \Vyck,  of  Xebraska.  thundered 
for  days  at  a  stretch.  "  [-"or  years/'  said  he,  "capital 
has  been  organi/ed.  b<  >ld.  im>crupulous,  rapacious,  law- 
defving,  moving  as  did  Could,  according  to  Ins  sworn 
testimony,  in  Xew  Nt  ork,  and 
deuce  of  hi-  own  written  '•  ~ 
lai ure -.  upon  the  conn s.  up'  •)  i l 
Slates,  unblu-dnnglv  purchasin 


ly8          HISTORY    OF    Till-:    GREAT    AMERICA  X     FORTl'XES 

.  .  .  In  a  republic  they  despise  the  people  and  control 
its  representatives." 1<s  "  The  time  has  come,"  put  in 
Senator  Conger,  "  when  generalities,  glittering  and  other- 
wise, will  not  satisfy  the  demands  of  the  people.  They 
demand  a  positive,  incisive,  direct  and  plain  law."  1T 
Senator  Call,  of  Florida,  had  his  say,  and  it  was  a  long 
one,  none  of  which  is  worth  quoting  except  his  assertion 
that  the  railroads  had  issued  $3,000,000,000  of  bogus 
bonds,  and  that  they  were  assessing  the  people  of  the 
United  States  to  pay  an  actual  taxation  of  $300,000,000 
yearly. 1S  More  than  one  Senator  and  Representative 
dwelt  indignantly  upon  that  $300,000,000  of  annual  en- 
forced taxation  extorted  by  the  railroads.  And  so  the 
debate  went  wearily  on,  tiring  out  everyone  but  the 
talkers  themselves,  whose  stock-in-trade  was  talk. 
Would  the  flow  of  words  never  end? 


THE    MIDDLE    CLASS  TRICKED   AXD   J5EATEX. 

At  last  an  interstate  commerce  law  was  passed.  Great 
was  the  rejoicing  among  the  middle  class.  Its  compo- 
nents exulted  in  iheir  victory,  and  in  visions  foresaw 
their  dominance  soon  restored  and  the  trusts  ruined  and 
extinguished. 

lint  after  a  comparatively  brief  interval  their  jubila- 
tion  became  blank  dismav.  This  law,  this  gre;it.  loiig- 
;igitated  for  law,  which  was  to  intrench  them  so  effec- 
tively, turned  out  to  be  an  utu-r  sham.  On  its  surface 
its  provisions  read  fair  and  smooth:  but  when  it  went 
io  thr  courts  the  perforating  began,  as  its  authors  in- 

D 


!•'!.(  >\\  KK1  Mi    OF    TI1F.    MOiUiAN     FOUTl'Nli  I1/; 

tended,  and  for  which  contingency  thev  had  expressed 
and  equivocally  drafted  it.  Due  clause  after  another 
was,  on  this  or  that  ground,  declared  inoperative  by  the 
courts;  the  interstate  Commerce  Commission,  which 
the  law  established,  had  not  even  the  power,  it  was  de- 
cided, to  compel  the  attendance  of  witnesses,  and  the 
courts  refused  to  grant  writs  of  subpiena  in  aid  of  its 
proceedings.  Further  mo  re,  railroad  official-  (  who  were 
the  only  persons  whose  testimony  could  secure  a  con- 
viction) were  excused  from  testifying  on  the  ground 
that  by  so  doing  they  might  incriminate  themselves.  In 
a  word,  the  Interstate  Commerce  Commission,  on  the 
establishment  of  which  as  a  peremptory  tribunal  the 
middle  class  had  built  such  high  hopes,  was  found  to  be 
nothing  more  than  an  inane  body  which  was.  allowed 
to  devote  itself  to  the  harmless  pastime  of  collecting 
statistics,  but  was  empowered  to  do  nothing  more 
serious. 

Again  the  bewildered  middle  class  found  itself  woe- 
fully routed.  While  it  had  been  holding  meeting-  and 
talking  and  petitioning,  tin-  magnates  had  sent  a  stream 
of  "  silent  arguments  '  coursing  through  the  exalted 
wall  of  Congre-s.  And,  in  fact,  some  <>f  the  verv  mem- 
bers of  Congress  who  were  so  vigorously  inveighing 
against  the  "high-handed"  corruption  oi  the  railroad 
magnate^,  and  demanding  punitive  law-,  were,  at  tlns 
verv  time,  themselves  implicated  in  a  great  -caudal. 


This  wa-  what  was  called  the  "  1  'an-  Klectric  Scan- 
dal ":  and  if  anv  reader  de-ire-  in  acquaint  him-elf  with 
the  vast  ramifications  of  corruption  in  Cnngre-s.  in  the 
courts  and  in  the  legi-lature-  at  the  time  let  him  (if 


2OO 

lie  dare)  read  the  1,284  pages  of  testimony  liken  by 
a  Congressional  Investigating  Committee.1.1"  The  Pan- 
hlectric  Company  was  a  competitor  of  the  Bell  Tele- 
phone Company:  at  least,  it  energetically  attempted  to 
be.  'j  he  Bell  Company  had  already  established  the 
validity  of  its  patents  in  the  courts,  although  not  with- 
out having  to  face  and  fight  down  charge  after  charge 
on  the  part  of  other  inventors  that  it  had  appropriated 
the  fruits  of  their  inventions.  The  testimony  before 
this  particular  Congressional  Committee  was  full  of 
charges,  sometimes  mere  insinuations,  at  other  times 
open  accusations,  that  in  order  to  attain  its  victory,  and 
to  secure  favorable  decisions,  laws  and  franchises,  the 
Bell  Telephone  Company  had  bribed  Congress,  the  va- 
rious legislatures  and  judges  either  by  mon'cv  or  by  gifts 
of  stock. 

Against  the  Bell  Company  the  Pan-Klectric  Company 
seemed  powerless;  but  as  a  last  resort,  its  promoters 
began  a  campaign  of  corruption  to  get  the  I  "nited  States 
Covernment  to  move  in  the  courts  lor  the  vacating  of  the 
Bell  patents.  Large  blocks  of  Mock  were  distributed 
among  vanou-  influential  Senators  and  Representatives, 
some  of  whom  offered  no  objections  to  being  made  direct- 
ors oi  the  Pan-Klectric  Company.  I  "nited  State-  Attor- 
nev-Ccneral  ( iarland  upon  who<e  say-so  depended 
whether  the  suit  for  vacating  the  Bell  patent-  <hould 
be  brought  or  not,  held,  it  was  charged,  not  less  than 
$10,000,000  o1  stock  m  the  ['an-I'llectric  '  ompanv,  for 
whiVh  stock  he  had  not  paid  a  dollar.  When  the  !  'an- 
Klectrir  promoters  were  interrogated  as  to  these  methods 
they  cvm'callv  pointed  mil  tint  the  Bell  Telephone  Corn- 
had  begun  its  career  bv  n-ing  preeiselv  the  sn.nie 


FLOWKKIXG  OF  TIM:  MORGAN  FORTUNE          201 

methods.  In  this  light,  the  Bell  Telephone  Company 
succeeded  in  completely  vanquishing  its  threatening 
competitor,  the  Tan-Electric  Company,  which  soon 
passed  into  nothingness.-0 

Such  was  the  majority  composition  of  a  Congress 
from  whom  the  middle  class  expected  such  great  and 
public-spirited  reforms  ;  this  was  the  Congress  which  was 
to  pass  laws  that  would  forever  check  '"  the  greedy,  in- 
satiable inroads  of  the  monopolies!  "  "  Monopoly  "  was 
the  particular  bugbear  of  those  years  ;  the  generic  thing 
that  politicians  could  always  conveniently  convert  into 
personal  political  capital  in  their  constituencies  by  flag- 
ellating it  with  roars  of  denunciation,  which  was  an 
exceedingly  popular  pose.  The  word  "  trust,"  be  it 
noted,  as  signifying  a  complete  monopoly,  had  not  then 
come  into  popular  usage.  Those  virtuous  outbursts  in 
Congress  against  the  monopolies,  served  the  purpose 
well,  but  one  overshadowing  fact  neither  the  middle  class 
nor  the  working  class  seemed  to  note,  namelv,  that  what- 
ever might  be  said  in  Congress,  nearly  every  bill 
apparently  drawn  to  curtail  the  power  of  monopolies 
and  wealth  \vas  so  ingeniously  drafted  that  its  so-called 
vital  prevision.-  failed  to  stand  the  te>t  of  the  courts. 
Yet  the  lawyers  in  Congress  who  drew  these*  bills  were 
ranked  as  the  foremost  "Constitutional  expert-"  in  the 
land  —  a  situation  not  at  all  contradictory  to  those  who 
understood  the  double-faced  nature  of  the  performances 
at  Washington. 

Man\'  State-  were  passing  drastic  anti-trust  laws. 
These  laws  did  not  essentiailv  arre-t  the  growth  of  trusts 
but  thcv  did  have  the  effect  of  spreading  a  certain  timid- 


of  wealth,  it  was  true,  cunirolled  the  machinery  of  Gov- 
ernment, and  criminal  proceedings  were  little  to  be 
feared.  Still,  with  the  public  temper  in  the  inflamed 
,-tate  in  which  it  was.  there  was  never  any  tellinf  what 
might  break  forth. 

1  he  great  railroad  magnates,  in  particular,  were  tired 
of  a  competition  resulting  in  the  cutting  of  rates,  in- 
creased expenses,  and  diminished  profits.  They  were 
eager  to  form  a  combination  effective  enough  to  pre- 
vent competition  in  the  respect  of  undermining  one  an- 
other's freight  and  passenger  rate>.  With  such  an 
agreement  in  force,  profits  would  be  immensely  increased, 
and  upon  the  strength  of  those  increased  profits,  more 
watered  stock  could  be  issued. 


Hut  who  \va.-  audacious  enough  to  undertake  the  in- 
itiative in  forming  this  combination?  In  a  way.  it  was 
a  perilous  tiling  to  do.  ]f  unbought  or  unintimidated 
public  officials  should  take  a  notion  to  prosecute  crim- 
inally, its  promoters  and  beneficiaries  were  liable, 
upon  conviction,  to  a  long  sojourn  in  prison.  Van- 
derbilt,  Gould  and  Huntington  and  other  magnates,  while 
caring  nothing  for  law.  did  not  choo-c  to  take  the  lead: 
moreover,  as  thev  were  ]ealou>  and  di-trustful  of  one 
;•;  ther,  it  would  not  have  been  iudiciou>  for  anyone  of 
them  to  have  done  -o. 

The  ideal  leader  in  this  exigency  was  J.  Pierpont  Mor- 
gan; and  how  he  stepped  forward  and  molded  the  nebu- 
lous  plan  into  a  definite,  concrete  combination,  will  now 
be  rdaled. 


CHAPTER  IX 

MORGAN  AS  A  BANKING  AND   RAILROAD   GRANDER 

On  January  2,  1889,  a  circular  marked  '"  Private  and 
Confidential,"  was  issued  by  the  three  banking  houses 
of  Drcxel.  Morgan  and  Company,  Brown  Brothers  and 
Company,  and  Kidder,  Peabody  and  Company.  The 
most  painstaking-  care  was  exercised  that  this  document 
should  not  find  its  way  into  the  press,  or  otherwise  be- 
come public.  Indeed,  extraordinary  measures  were 
taken  to  surround  its  contents  with  every  precaution  of 
secrecy. 

Why  this  fear?  Because  the  circular  was  an  invita- 
tion, tacitly  understood  as  a  command,  to  the  great  rail- 
road magnates  to  as.-emble  at  Morgan's  house.  Xo.  210 
Madison  avenue,  and  there  form,  in  the  phrase  of  the 
day,  an  iron-clad  combination.  The  plan  was  to  make 
a  strict  compact  which  would  eft  ace  competition  among 
certain  railroad-,  and  unite  those  intere-t-  in  an  agree- 
ment by  which  the  people  ol  tin-  I  nited  Stale-  could  be 
bled  even  mure  effectively  than  before.  For  the  sake 
of  appearance,  in  ca-e  the  nature  of  the  undertaking 
should  leak  into  public  print,  the  promoter-  garnished 
over  their  real  purpose--  with  a  string  ot  diverting 
phrases.  Their  sole  aim,  so  ihcy  pleasantly  indited  it. 
was  an  association  "to  maintain  public,  reasonable,  uni- 
form and  -table  rate-."  and  they  added  that  another  ob- 
iect  would  be  the  gathering  of  -lati-tic-  regarding  rail 
ways. 

203 


Such  subterfuges  deceived  nobody  but  the  credulous  or 
uninformed. 


A    HISTORIC    MEETING    IX    MORGAN'S    HOUSE. 

That  circular  is  a  historic  document,  well  worth  more 
than  passing  notice ;  and  he  who  is  familiar  with  the 
forces  then  at  work  will  rightly  consider  it  of  far  greater 
importance  than  Presidents'  messages,  ordainments  of 
Congress  or  Courts'  decrees. 

At  a  time  when  the  whole  gravamen  of  law  and  ju- 
ridical precedent  was  being  used  to  insist  upon  indus- 
trial forces  remaining  stationary  and  stagnant,  this  cir- 
cular came  as  a  proclamation  of  defiance.  Common  and 
statute  law  sternly  declared  that  the  thing  called  com- 
petition in  trade  must  be  kept  alive,  and  that  if  it  could 
not  sustain  itself  by  its  own  merits,  the  law  should 
demand  its  maintenance.  The  causes  producing  and 
justifying  competition  were  passing  away,  but  none  of 
the  law-making  bodies  recognized  the  newer  conditions, 
nor  made  any  provisions  for  them.  But  the  magnates 
realized  that  the  old  indiscriminate  system  of  competi- 
tion was  rapidly  becoming  archaic,  and  that  the  time 
was  ripe  for  a  more  systematic  organization  of  indus- 
try. And  so,  while  Congress  and  the  legislatures  were 
busily  enacting  law  after  law,  supposedly  edicts  of  "  the 
sovereign  people  of  the  I'nited  State-,"  a  few  magnates 
issued  a  brief  circular  which  intrinsically  was  of  far,  far 
more  binding  weight  than  entire  volumes  of  statutes  im- 
potent, in  the  long  run.  in  the  face  of  onrushing  eo> 
n<  >i;nr  i<  >rces. 

llie    ideas    <>\    the    people    at    large    and    the    self- 


poses  down,  as  the  magnate.-  did.  and  however  harmlcs- 
they  might  represent  their  aims,  the  plan  of  this  group 
ol.  hankers  and  railroad  grandees  was  certain  to  arouse 
the  sharpest  suspicions.  A  restless,  sullen  state  of  mind 
pervaded  the  mass  of  people.  Distrustful  of  any  asser- 
tions made  hy  the  magnates,  they  were  ever  ready  to  see 
sinister  projects  beneath  bland  announcements.  Fur- 
thermore, the  magnates'  definition  of  "  reasonable  "  was 
diametrically  different  from  that  of  the  people  at  large. 
.\fatters  and  charges  that  the  magnates  honeyed  over  as 
"  reasonable  adjustments,"  impressed  the  popular  under- 
standing as  extremely  unreasonable;  as  gross  extortions 
of  which  the  law  should  take  condign  notice. 


\\'RKCKixd   TIII-:   Minni.K  CLASS  C.UADL'ALLV. 

At  the  behest  of  the  middle  class,  laws  directed,  super- 
ficially at  least,  against  the  magnates'  arbitrary  power 
and  concentration  of  resources  were  everywhere  being 
passed.  Since  the  putting  down  and  dissolution  of  the 
great  labor  movement  of  1886,  serious  inroads  from  that 
quarter  were  no  longer  feared.  Putt  the  work  of  ex- 
tinguishing the  middle  class  had  to  be  proceeded  with 
slowly  and  discreetly. 

Workers'  uprisings,  political  or  other,  could  be  crushed 
by  force  and  court  decrees  and  by  bribery  and  fraud  at 
the  polls.  In  any  emergency  the  whole  middle  class 
would  stand  with  the  great  propertied  interests  in  sub- 
duing the  working  class.  Yet  when  the  fight  for  su- 
premacy was  one  confined  to  the  middle  class  and  the 
plutocracy,  the  magnates  had  good  reason  not  to  attack 
the  middle  class  too  openly.  The  country  swarmed  with 
organizations  of  manufacturers,  jobbers  and  small  trade-- 
men, and  in  the  XYest  and  South  the  Farmers'  Alliance, 


2O6         HISTORY    01'    TIIF.    GRKAT    AMKRJCAX    FOKTUNK.S 

an  ally,  was  at  its  strongest.  This  middle  class  arrogated 
tn  itself  the  distinction  of  being  "  the  public."  The  work- 
ing class,  whom  it  used  and  exploited,  had  only  a  few 
obscure  trade  journals  to  disseminate  its  views  and  voice 
its  demands,  and,  although  comprising  the  immense  bulk 
of  the  voters,  had  not  a  single  real  representative  in 
political  office.  But  the  interests  of  the  middle  class  were 
represented  by  thousands  of  newspapers  and  journals; 
by  a  host  of  political  spokesmen  and  lawyers  and  college 
professors,  and  by  the  force  of  prevalent  law  and  com- 
mercial institutions. 

In  warring  upon  the  magnates  the  most  persistent  argu- 
ment that  the  middle  class  used  in  its  appeal  for  sympathy 
and  support,  was  that  the  extortions  of  the  magnates 
were  immoral.  Precisely  as,  when  the  \vorkingmen  in 
previous  decades  had  struck'  for  a  shortening  of  their 
hours  of  daily  labor,  the  manufacturers  had  declared  the 
movement  insurrectionary  and  immoral,  so  now  they 
used  the  same  plea  against  the  exactions  of  the  magnates. 
When  the  workers  complained  that  their  bosses  oppressed 
them,  the  bosses  retaliated  with  the  charge  that  the 
workingmen  were  unruly,  and  that  their  demands  for 
redress  were  not  based  on  morality.  Hut  when  the  mag- 
nates squeezed  the  manufacturers,  jobbers  and  retailers 
then  these  diyisions  of  the  middle  class  made  vehement 
lamentations  that  they  were  the  victims  of  an  immoral 
conspiracy. 

Nothing  could  exceed  the  baseness  and  hypocrisy  of  the 
middle  class,  as  a  class.  It  demanded  the  widest  latitude 
m  law  in  placing  no  restrictions  upon  it  either  in  exploit- 
ing its  employes,  or  in  robbing  back  from  them  in  variou- 
swindling  ways  the  meager  wages  it  paid.  It  insistently 
fought  the  workers'  struggle  for  a  shorter  workday  and 
more  wages;  it  opposed  the  passage  of  even  slight  laws 


for  the  pr< 'lection  of  the  uorkciV  labor;  ii  combated 
inovcincnts  for  factor}'  and  tenement  reionns.  At  tin- 
same  time  it  insisted  upon  its  right  to  make  and  sell 
shoddy  goods  and  adulterated  products,  and  impose  them 
upon  the  workers  at  extortionate  prices. 

The  manv  laws  which,  after  strong  agitation  on  the 
part  of  labor  organizations  and  various  other  bodies,  the 
different  legislatures  were  passing  at  this  time,  indicate 
the  widespread  practice  of  manufacturing  and  selling- 
adulterated  and  often  poisonous  foods  and  drug--.  The 
passage  of  these  laws  had  long  been  contested  by  the 
capitalist  class,  as  a  whole;  and  even  after  they  were 
enacted,  they  were  not  generally  enforced,  and  were  so 
ineffective  that,  many  years  later,  during  Roosevelt's  ad- 
ministration, a  Xational  Pure  Food  Act  was  passed  by 
Congress  after  the  severest  and  most  persistent  opposi- 
tion on  the  part  of  the  beneficiaries  of  the  frauds.  Tin- 
law,  also,  has  been  largely  ineffective. 

In  i8/(j,  Wisconsin  enacted  a  penal  law,  providing 
penalties  for  the  adulteration  of  foods  and  drugs. 
Ohio,  in  1887,  1800.  and  r8<)8  passed  law<  for  the  pun 
ishment  of  variou^  kind.--  of  adulteration.  Xew  York, 
in  i8<)3  and  [8<j8,  passed  laws  forbidding  the  fraudulent 
sale  of  certain  imitation  foods  and  certain  fraudulent 
stamped  goods.  After  vears  of  agitation.  Massachusetts. 
in  180,7.  passed  a  law  (Chap.  3441  prohibiting  the  man- 
ufacture or  sale  of  adulterated  food.  Missi  uri,  in  i88<> 
and  18(^7.  passed  \:\\\  <  against  the  adulteration  of  cer- 
tain foods.  Iowa  enacted  laws  for  the  punishment  of 
those  selling  adulterated  milk,  cheese,  butter  and  linseed 
oil.  Illinois,  in  1881.  passed  a  law  again-t  the  fraudu- 
lent manulacture  or  srde  of  imitation  butter,  and  re- 
enacted  it  in  18117.  Xe\\  Jersey,  in  the  same  year. 
pa<>ed  an  act  to  prevent  the  adulteration  of  food^  and 


2O8         HISTORY    Ol-    Till-'.    GRMAT    AMERICAN     I'ORTL'XKS 

drugs,  and  enacted  another  law  in  1897.  Pennsylvania 
prohibited  the  sale  of  adulterated  drugs,  and  provided 
1  enaltics  for  the  adulteration  of  milk  and  cream.  Michi- 
gan, in  1895,  passed  an  act  to  prohibit  and  prevent 
adulteration,  fraud  and  deception  in  the  manufacture 
and  sales  of  articles  of  food  and  drink.  Nebraska  and 
Kentucky  passed  similar  laws.  South  Dakota,  in  1885, 
enacted  penal  laws  relating  to  the  adulteration  of  food 
and  drink,  and.  in  1897,  passed  another  act  increasing 
the  penalties.  These  are  some  examples  of  the  various 
State  laws.  Nearly,  all  of  the  States  also  passed  laws 
against  the  sale,  by  fraudulent  weights  and  measures,  of 
coal,  wheat  and  various  other  foods  and  commodities. 


CHARACTERISTICS    OF    THE    MAGNATES     CRITICS. 

Not  a  move,  on  the  other  hand,  could  the  magnates 
make  without  the  middle  class  raising  the  cry  of  fraud 
—  a  not  untrue  accusation,  it  is  hardly  necessary  to  say, 
but  one  singularly  ill-chosen  from  a  class  itself  gan- 
grened with  fraud.  The  Farmers'  Alliance  and  kindred 
organizations  virtuously  fulminated  against  the  extor- 
tions and  frauds  of  the  magnate  class:  the  cattle  dealers 
of  the  Southwest  especially  were  not  merely  bitter,  but 
rancorous!}-  so,  against  the  railroad  kings.  Yet  all  of  the 
large  cattle  ranches  had  been  obtained  by  fraud  in  more 
or  less  degree.1  The  cattlemen  not  only  practiced  cx- 
tortions,  but  in  their  economic  wars  with  adjacent  cattle- 
men, forced  their  cowboys  to  fight  and  kill  the  cowboys 

'See  House  Report?.  Forty-eighth  Congress,  Second  Sessinp. 
1884-5.  Executive  Document  No.  267 :  xxviv.  This  document 
deals  with  the  Texas  ranches.  In  prcvi-ms  chapters  of  this  work 
many  fact-  have  been  Lnven  from  official  documents  showing 
the  illegal,  ar.'i  •  'ten  violent,  seizure  of  cattle  rancho  through 
out  the  \Yest. 


of    their    neighbor-,    and    risk    being    killed    them  cive    : 
nearly   all   of   those  cowboy   affrays   so    romantically   de- 
scribed in  fiction,  arose  from  nothing  more  or  less  than 
economic  disputes  between  competing  rival  master  caitlv 
men. 

To  say  that  the  entire  manufacturing  cla-s  was  de- 
frauding and  swindling  in  ever}-  conceivable  form  is  but: 
to  state  a  truism  elaborated  upon  specifically  in  many  a 
public  document. 

Leaving-  a-ide  the  current  stupendous  frauds  in  profit- 
ing from  misleading  semi-worthless  merchandise,  or 
adulterated  products  sold  under  fal-e  pretense-;  —  a  traf- 
fic shared  in  by  wholesaler,  jobixr  and  retailer;  aside 
from  this  phase  and  a  multitude  of  other  phases,  we  shall 
simply  give  one  typical  graphic  example  of  what  the  man- 
ufacturers were  doing  in  one  of  the  largest  manufactur- 
ing States  in  the  Union.  While  protesting  against  the 
evasion  of  taxation  by  the  railroad  corporation-,  the 
manufacturers  were  defrauding  in  the  one  item  of  tax- 
ation alone  of  a  sum  gigantic  in  the  aggregate.  "It  is 
a  notorious  fact,"  reported  Comptroller  Morgan,  oi  Xew 
York  State,  in  ujoo.  "that  hundred.-  of  manufacturing 
companies,  whose  plants  are  located  in  thi-  State,  who-e 
business  is  chiellv  trail-acted  here,  and  which  tor  all  prac- 
tical purposes  are  Xew  York  enterprises,  escape  all  in- 
direct taxation  in  this  Stale,  and  much  local  taxation, 
by  being  incorporated  in  other  State-."  They  paid  -ub- 
-tantialh-  nothing  for  tire  and  police  protection,  Comp- 
troller Morgan  aided.'-'  Yet  in  case  their  employe- 
struck.  the>e  manufacturers  were  ever  ready  to  requisi- 
tion the  pretext  of  violence  and  demand  police  and  mili- 
tia to  club  or  shoc.it  into  submission  the  ver  working 


210 

class  from  who.-e  labor  the  entire  burden  of  taxation 
came.  This  had  been  a  long-continuing  condition  of  af- 
fairs in  every  State. 

MORGAN"    DIRECTS    MATTERS. 

These  facts  will  give  a  fairly  clear  idea  of  the  compo- 
sition and  pretensions  of  that  middle  class  which  the 
news  of  the  meeting  in  Morgan's  house  was  bound  to 
excite  into  convulsions.  A  momentous  gathering  it  cer- 
tainly was  that  assembled  in  Morgan's  mansion  on  Jan- 
uary 8,  1889.  Who  are  they  we  note  there?  Apparently 
private  citizen-;  in  reality  monarchs  of  the  land:  Jay 
Gould  with  his  son  George,  held  by  the  leading  strings  ; 
Stickney.  of  the  Northwest  territory;  Roberts,  of  the 
Pennsylvania  Railroad  ;  sleek  Depew.  echoing  the  Yan- 
derbilts  ;  Sloan,  of  the  Delaware,  Lackawanna  and  West- 
ern Railroad,  and  a  half  dozen  more  magnates  or  their 
accredited  mouthpieces.  The  honorable  legislatures 
could  gravel}-  discuss  the  advisability  of  this  or  that  leg- 
islation :  the  noisy  "Congress  of  the  United  States" 
could  solemnly  meet  and  after  wearing  out  months  in 
rodomontade,  profess  to  make  law.-;  the  high  and  mighty 
Court-  could  blink  austerely  and  pompously  hand  down 
their  decision-,  Hut  in  that  room  in  Morgan's  house  sat 
many  of  the  actual  rulers  of  the  United  States  ;  the  men 
who  had  the  power  in  the  final  say  of  ordering  what 
-h-  >uld  be  done. 

Morgan  \va-  chairman  of  the  meeting,  and  with  wonted 
tie  directness  went  -traight  to  the  point.  Thank- 
to  a  stenographic  report  <»f  the  proceedings  which  fortu- 
nate! v  we  have  been  able  to  get  hold  of,  the  work  of 
that  meeting  is  clear.  The  name  of  the  organization 
wa^  to  be  the  "  Interstate  Commerce  Railway  Commis- 


-ion";  its  essential  purpose  the  cessation  of  competition 
among  its  members.  [Jut  how  was  any  magnate  to  be 
prevented  from  competing-  with  another,  or  stopped  from 
encroaching  upon  another's  domain?  What  penalties 
should  there  be,  and  how  could  they  be  enforced?  Cer- 
tainly no  law  could  be  invoked  to  compel  the  earning  out 
of  such  an  agreement,  for  the  law  explicitly  prohibited 
combinations,  and  any  legislation  would  not  only  be  out- 
lawed, but  would  reveal  the  extent  of  the  whole  criminal 
compact. 

Ill-:    DELIVERS    A     MAXDATK. 

There  was,  however,  a  far  greater  power  than  that  of 
law.  namely,  the  power  of  massed  money.  If  any  mag- 
nate present  were  inclined  to  balk  at  the  prepared 
program  he  was  brought  to  an  instant  realization  of  the 
punishment  when  Morgan  announced: 

I  am  authori/ed  to  -ay,  I  think,  on  behalf  »f  the  [banking] 
houses  represented  hen-  th;it  if  an  organi/ation  can  IK  formed 
practically  upon  the  basis  submitted  by  the  committee,  and  with 
an  executive  committee  able  to  enforce  it.-  provisions,  upon 
which  the  bankers  shall  be  represented,  they  are  prepared  to  say 
that  they  will  not  negotiate,  and  will  do  everything  in  their 
power  to  prevent  the  negotiation  of,  any  securities  tor  the  con- 
struction of  parallel  lines,  or  the  extension  of  lines  not  ap- 
proved by  that  executive  committee.  I  wish  that  distinctly  un- 
derstood.;; 

The  threat,  or  promise,  a-  it  could  be  differently  inter- 
preted, wa-  assuredly  understood.  \  a-t  as  was  the 
wealth  of  the  magnates  prc-uit  or  represented,  neither 

anv  one  or  a  combination  of  them,  dared   i  had  thev  been 


212 

so  disposed  J  to  defy  such  ;m  ultimatum.  To  do  so  meant, 
inviting  the  vindictive,  cru-hing  wrath  of  a  clique  of  na- 
tional and  international  bankers  whose  money  and  power 
could  be  used  with  the  most  destructive  results.  Xor 
was  there  any  possible  way  of  appealing  to  a  higher 
power. 

What  if  many  of  the  State  legislatures  had  penalized 
combinations  in  restraint  of  trade?  What  if  the  irate 
middle  class  was  frantically  clamoring  for  the  enforce- 
ment of  these  laws?  What  if  in  both  common  and  stat- 
ute law  this  coercive  decree  of  the  bankers  was  criminal 
conspiracy  ?  Kvery  man  in  that  assemblage  knew  that, 
judged  by  prevailing  laws,  he  was  participating  in  a  con- 
spiracy, yet  no  apprehension  was  acutely  felt  that  the 
numerous  national  and  State  law>  would  be  strictlv  en- 
forced against  him.  So  confident  of  its  ground  was  the 
meeting,  that  the  subject  of  possible  prosecution  wa<  not 
given  a  thought.  The  -acred  doctrine,  the  "inalienable. 
undeprivable  right"  of  competition  was.  without  any 
ambiguity  or  ceremonv,  given  a  deadly  blow.  For  that, 
if  for  no  other  reason,  the  meeting  was  memorable.  The 
magnates  were  sure  of  immunity.  To  them  laws  were 
instruments  not  obstacles:  the  same  code  of  laws  which 
they  lightlv  stamped  under  foot  they  could  always  suc- 
cc>-fully  use  against  workingmen  on  strike,  as  they  did. 
for  example,  five  years  later,  in  the  great  railroad  strike 
of  i8«;4,  when  Federal  troops  were  ordered  out  at  their 
command  to  overawe,  and,  if  necessary,  mow  down  the 
strikers. 

Another  pha>e  of  that  meeting  (a  "conference."  as  it 
\va-  called)  deserves  mention.  I  Tow  much  of  a  vacuitv 
mm  were  considered,  magnate1-  though  they  were,  air! 
how  all  important  propertv  was  held,  was  shown  bv  t!  . 
method  of  voting.  \-  each  proposition  was  advanced 


it  was  put  to  a  vote.  The  names  of  the  magnates  were 
not  mentioned  in  the  roll-call ;  it  was  the  corporate  rail- 
roads which  were  expected  to  vote  and  which  did  vote. 
Thus,  instead  of  Gould's  name,  the  name  of  his  railroad- 
was  called;  the  Missouri  Pacific  and  the  \Yahash  voted, 
not  Gould.  \Yhat  could  have  been  more  beautifully  sim- 
ple and  direct,  so  free  from  cant,  so  faithful  to  the  spirit 
of  the  human  money  bags  present?  If  this  method  were 
only  adopted  in  Congress  much  good  in  point  of  popular 
understanding  would  result,  for  while  the  old  forms  there 
still  persi>t.  most  of  our  ''statesmen"  would  not  be 
libelled  were  the  roll-call  made  by  corporations  instead  of 
by  putative  representatives  of  the  people. 

If  a  mere  threat  of  the  powerful  bankers,  led  by  Mor- 
gan, was  enough  to  convince  or  overawe  a  group  of  the 
railroad  dictators  of  the  I'nited  States,  what  could  not 
the  banking  power  accomplish  when  it  actively  concen- 
trated its  might  of  monev  upon  a  given  object?  Xcither 
capitalist  foe  nor  any  government  could  withstand  it. 
The  extreme--  lo  which  it  could  go  in  successfullv  execut- 
ing its  plans  and  in  dissipating  all  obstacles  by  its  ter- 
rorism, was  tvpically  shown  in  a  noted  bond  deal,  in  1895. 
whereby  the  I'nited  States  Government  was  held  up  by 
a  syndicate  of  bankers  headed  by  Morgan,  and  forced  to 
give  over  a  virtual  gift  of  many  million-  of  dollars  for 
the  privilcuv  of  having  a  nominal  and  transient  claim  on 
a  supply  of  g>ld  which  those  same  bankers  had  drained 
from  the  I'nited  States  Treasury  only  a  short  time  pre- 
viouslv. 


214         HISTORY    OF    THE    GREAT    AMERICAN    FORTUNES 

reer.  His  father  died  in  1890,  bequeathing  to  him  a 
fortune  superficially  estimated  at  $10,000,000.  But  it  is 
needless  to  say  that  J.  Pierpont  Morgan  was  already  a 
-eignorial  multimillionaire.  That  he  was  intensely  hated 
by  a  large  portion  of  the  element  in  the  financial  district 
was  undeniable,  but  it  was  a  hatred  caused  not  by  objec- 
tion to  his  methods,  but  because  he  eminently  surpassed 
in  either  the  brutality  or  finesse  of  those  methods.  All 
of  his  decriers  of  his  own  rank  had  at  basis  some  per- 
sonal grievance  resolving  itself  into  a  rankling  enmity  at 
being  outwitted  or  outdone  by  Morgan.  Had  he  given 
them  the  slightest  opening  they  would  have  enmeshed 
and  swindled  him  and  gloated  over  the  deed. 

But  with,  the  exception  of  one  distinguished  antagonist, 
to  whom  we  will  refer  later,  he  anticipated  and  overcame 
them  all,  and  left  many  of  them  with  the  embittered 
memory  of  their  collision  with  him.  but  with  nothing 
more  substantial.  Xo  doubt  Morgan's  personality  had 
much  to  do  with  this  current  hatred  on  the  part  of  those 
who  came  into  contact  with  him  ;  he  was  at  no  time  to 
be  suspected  of  being  of  the  unctuous  order  of  men,  full 
of  blandishments  and  sweetened  guile.  Rather,  he  was 
a  sort  of  plug-ugly  in  the  financial  purlieus,  belligerent 
and  ruthless,  with  a  rough,  dictatorial  manner,  unsparing 
of  the  feelings  or  interests  of  those  who  in  any  way 
crossed  his  will  or  plans. 

Those  personal  details,  however,  were  not  known  to 
the  great  ma-s  of  the  people  the  country  over.  The 
popular  conception  of  men  in  public  notice  was  derived 
almost  wholly  from  what  the  newspapers  >aid.  and  these 
•orMai  t'y,  with  rare  departure-,  portrayed  Morgan  a- 

IMVM    financier    and    benevolent   gentleman.      In    MOT- 

icial  transactions  immense  number-  oi"  the  mid- 

.   as   well   a-   people   higher   in    the   -eale   of   the 


well-to-do,  lost,  in  the  aggregate,  great  sums  of  money 
torn  from  them  in  the  stockjobbing  operations  in  Wall 
street.  P.ut  they  did  not  blame  Morgan  per-onalh  ;  their 
bitterness  \vas  cast  at  the  generic  monster  called  Wall 
street.  And  yet  noi  a  -ingle  one  of  those  thus  stripped 
had  not  deliberately  set  out  to  enrich  himself  at 
someone  else's  expense;  even  those  who  pu'  their  fii.r.ds 
in  stocks  for  the  purpose  of  "  legitimate  investment,"  did 
so  with  the  full  knowledge  that  the  lower  the  wages  paid 
on  the  railroads  and  in  the  factories,  and  the  longer  the 
daily  labor  of  the  workers,  the  brighter  were  the  chance- 
for  a  larger  dividend. 

At  the  same  time,  while  hated  in  the  financial  dis- 
trict, Morgan  was  deeply  feared  for  his  far-reaching 
power,  and  what  were  considered  his  relentless  methods 
both  in  accomplishing  his  ends  and  in  settling  scores. 
(  )bservers  usuallv  described  him,  in  the  slang  of  Wall 
street,  as  a  man  who  was  in  business  "  for  all  there  is 
in  it."  As  though  anyone  else  were  in  Wall  street  for 
a  different  purpose!  His  policy  was  regarded  as  th;it 
of  finding  a  weak  spot  in  a  corporation  and  then  "  squeez- 
ing it  for  all  it  was  worth"-  — a  very  much  biased  accu- 
sation, inasmuch  as  every  other  successful  financier  in- 
controvertiblv  pursued  the  same  methods,  although  not 
always  in  the  same  way.  His  favorite  expression. 
when  questioned  about  his  transactions  was,  "  1  am  not 
in  Wall  -tree'  for  my  health."  His  enemies  whi-pered 
about  that  he  was  a  "  freehootrr  in  finance  ":  hi-  admir- 
ers—those who  profited  by  his  bounty — -loudly  pro- 
claimed his  "'reatne--. 


Railroad  from  McLeod,  in  1893,  we  have  already  given 
a  description.4  In  that  account  it  was  shown  how,  when 
.MeLeod  pressingly  needed  funds  both  to  finance  his  rail- 
road's coal  combination  and  to  pay  for  improvements, 
he  found  that  the  leading  banking  institutions  had  im- 
paired, and  then  cut  off,  his  credit.  Morgan  and  Yan- 
derbilt  were  then  able  to  assault  and  beat  down  the 
price  of  Reading  stock,  buy  large  quantities  of  it  at  a 
very  low  figure,  and  gain  control  of  the  system.  As  a 
railroad,  the  Reading  line  was  not  extensive:  its  great 
value  lay  in  its  ownership  of  anthracite  coal  mines,  of 
vast  unmined  deposits,  and  in  its  coal-carrying  traffic. 

To  his  other  manifold  powers  Morgan  now  added 
that  of  coal  magnate.  The  Constitution  of  Pennsylva- 
nia, as  we  have  seen,  expressly  forbade  railroad  cor- 
porations from  owning  and  operating  coal  mines.  But 
that  law  did  not  exist  which  the  very  rich  were  not  able 
to  evade.  Dummy  holding  companies  were  organized  ; 
and.  although  everybody  knew  that  these  companies  were 
mere  subterfuges,  the  public  authorities  took  no  action, 
and  when,  after  many  years  of  inactivity,  they,  with  in- 
different energy  brought  suit,  the  case  was  appealed  by 
the  magnates  to  the  Supreme  Court  of  the  United  States, 
from  which,  in  1909.  the  railroads  emerged  victorious 
with  a  decision  of  so  equivocal  a  nature  as  to  be  tanta- 
mount to  one  in  their  favor. 

Two  immediate  re>ults  signalized  Morgan's  entry  as 
a  monarch  of  the  coal  fields.  To  both  we  have  adverted 
in  a  previous  chapter,  but  they  will  here  bear  repetition. 
Kvery  housekeeper  using  hard  coal  was  taxed  to  add 
more  millions  to  Morgan's  fortune:  the  price  of  stove 
coal  was  raided  from  81.25  t<>  Sr.^5  more  a  ton  (ban 
had  bt-rn  chared  lie  fore.  The  second  result  \vas  the 


more  rapid  process  of  crushing  <  »nt  the  independent  coal 
operators.  Ilv  a  concatenation  of  ruthless  methods  •' 
these  independents  were  ruined  and  driven  out,  not  with- 
out much  wailing  against  oppression,  and  shrill  charges 
of  fraud. 

Yet  the  very  mines  which  the}-  were  virtually  coerced 
into  giving  up  had  been  secured  by  fraud,  either  by  them 
or  by  their  predecessors.  The  law  records  of  the  State 
of  Pennsylvania  reveal  case  after  case,  before  and  after 
the  Civil  \\  ar,  of  fraudulent  tax  sales  of  lands  contain- 
ing coal;  and  the  bribery  of  the  Pennsylvania  Legisla- 
ture by  individuals  and  corporations  for  coal  mining 
and  other  kinds  of  charters  and  special  rights  had  been 
so  admittedly  brazen  that,  in  1847.  the  Legislature,  with 
self-righteous  display,  was  constrained  to  pass  an  "  Act 
to  Define  and  Tunish  the  Offense  of  1'ribery."  making 
the  crime  of  giving  or  receiving  a  bribe  a  felony,  pun- 
ishable with  a  hue  not  exceeding  S;.ooo  or  a  sentence 
of  five  years  in  prison."  This  law  was  treated  with  lev- 
ity ;  it  had  no  other  effect  than  to  refine  and  obscure  the 
methods  of  bribery.  Another  act  was  parsed  on  March 
3,  1860,  and  a  third  on  April  20,  1874.  which  laws  were 
likewise  facetiously  regarded  by  the  seekers  of  vested 
privileges,  and  the  bribery  went  on  per^istentlv.7  Time 


:iy    connmiiHis    scandals    qrou-ir.ir    <>'•'    <  : 
ennsylvania  Legislature  \va-  that  of  th"  pas 
^-(i  in  the  interest   of  the  lunibermin.      Ms    ;- 


after  time  the  Legi-lature  '  f  i 'enn-ylvania  was  forced  to 
appoint  investigating  committees  to  report  on  this  or 
that  charge  that  bribes  had  been  used  ;  one  of  the  few 
time.-  when  any  of  the  bribed  ever  went  to  prison  was  in 
the  Riot  Indemnity  Hill  trial-  in  18/9-80. 

Some  excuse  was  needed  to  give  the  appearance  of  a 
necessity  for  the  great  increase  in  the  price  of  coal.  The 
coal  magnates  supplied  it  beforehand.  They  inquired 
how  thev  could  avoid  charging  more.  Had  not  the  pro- 
duction of  coal  fallen?  And  were  not  the  freight  rates 
extremely  high'  Pun  the  Government  knew  that  these 
claims  were  fabrications.  The  House  Committee  on 
Interstate  Commerce  had  unanimously  reported  that  the 
coal  magnates  had  deliberately  reduced  the  output  of 
coal:  that  although  the  capacity  of  the  collieries  was 
5O.ooo.ocjo  tons  a  year,  yet  only  about  40,000,000  tons 
were  being  mined,  so  as  to  make  a  show  of  scarcity. 
And  as  regard-  freight  rates  for  coal  the  committee  re- 
ported, "  Although  coal  in  freight  can  be  handled  cheaper 
than  almost  any  cla-s  of  freight,  yet  it  pays  nearly  dou- 
ble the  rate  of  wheat  and  cotton."' 

Without  quibble,  this  combination  was  a  conspiracy, 
criminally  ami  civilly  liable.  Hut  neither  National  or 
State  law  was  enforced  again-t  it.  The  House  Commit- 
tee reported  that  the  Interstate  Commerce  Act  was  too 
ineffective  a  law  to  proceed  under,  and  that  ended  talk 
•••;"  criminal  prosecution.  The  Government  machinery  of 

e  I  nitcd  State-  practically  became  (as  it  did  in  so 
many  other  in-tance-  )  an  accessory  of  the  coal  combina- 
tion in  allowing  it  to  -queeze  more  huge  extortion-  from 
the  Buffering-  of  the  mass  of  the  people. 

The  boa-ted  Government  "of,  for  and  by  the  people/' 
vva-  a  Government  run  wholly  by  the  great  propertied 


.: ;  >j 

interests  as  a  necessary  appendage,  based  upon  force,  for 
compelling. tlie  people  to  submit  without  redrew  or  quar- 
ter.  Such  operations  as  this  explain  how  Morgan'>  for- 
tune leaped  by  millions  at  a  time;  every  dollar  extorted 
in  that  increase  of  price  came  very  largely  from  familie- 
wlio,  already  burdened  by  a  thousand  and  one  extor- 
tions, were  forced  to  suffer  still  more  keenly  ;  each  new 
compression  from  above  drove  them  deeper  into  abject 
poverty,  with  all  its  demoralizing  and  horrible  evils. 
The  whole  edifice  of  capitalism  was  built  on  a  vast, 
ghastly  charnal  house,  overcrowded  with  the  bones  of 
numberless  victims.  Yet  the  industrial  grandees  who 
thus  slaughtered  with  impunitv  in  the  insidious  ways  of 
trade  paraded  themselves  as  very  devout  men:  Morgan 
was  a  vestryman  of  St.  George's  Church,  Xew  York 
City,  and  ostentatiously  passed  the  contribution  plate  in 
the  name  of  Christ. 

To  this  coal  transaction  of  Morgan's  there  is  a  sequel, 
showing  how,  and  by  what  methods,  he  expanded  as 
a  coal  dictator,  but  the  recounting  of  this  will  be  de- 
ferred to  its  proper  chronological  place,  and  that  famous 
bond  deal  of  his  in  1895  will  be  considered. 


TRAXSPKRRIXT,    ("IKCAT    RAILROAD    SYSTEMS. 

The  two  Drexcl  partners  of  his,  Frank  and  Anthony 
Drexel,  passed  away,  each  leaving  an  estate  of  $25.000.- 
ooo.  The}",  too,  had  acquired  the  glorious  name  of 
philanthropists ;  before  dying  they  had  together  given 
away  the  sum  of  $8,000,000  to  found  sundry  charitable 
institutions  in  or  near  Philadelphia.  Since  their  part- 
ner>hip  with  Morgan  they  bad,  of  course,  shared  in  all 
of  hN  transaction?.  Some  of  these  \ve  -hall  have  to 
pa>.-  over  with  only  a  reference,  inasmuch  as  the  fact- 


are  exceedingly  involved.  But  this  one  point  sticks  out: 
Great  railroad  systems,  in  the  building  of  which  neither 
Morgan  nor  his  associates  had  in  the  slightest  partici- 
pated, which  had  been  constructed  largely  with  public 
f.mcls  and  gifts  of  public  land,  and  which  they  had  never 
seen  until  long  after  they  were  in  operation :  —  these 
railroads  suddenly  passed  into  the  ownership  of  the 
.Morgan  combine,  which  largely  meant  Morgan. 

How  did  this  transformation  come  about?  Shall  \ve 
have  to  retell  the  old  story ;  the  original  looting,  the 
bankruptcies,  reorganizations,  and  tricks  of  finance, 
squeezing  out  of  creditors  and  small  stockholders? 
However  glib  financial  writers  may  attempt  to  explain 
it,  or  with  whatever  fine  phrases  apologists  might  gloss 
it  over,  the  matter  reduces  itself  to  this  trenchant  fact : 
That  Morgan  became  possessed  of  great  railroad  sys- 
tems in  the  South,  with  the  initiation  and  operation  of 
which  he  had  had  no  more  to  do  than  a  babe.  The 
Industrial  Commission  reported  these  railroads  as  being 
in  the  "  Morgan  group  "  by  1901  :  The  Southern  Rail- 
way, with  its  6.807  miles  of  track;  the  Mobile  and  Ohio 
Railroad,  the  Queen  and  Crescent,  the  Central  of  Geor- 
gia (later  taken  over  by  Harriman),  the  Georgia  South- 
ern and  Florida,  the  Macon  and  Birmingham,  the 
Philadelphia  and  Reading,  the  Lehigh  Valley,  the  Erie 
( subsequentlv  acquired  by  Harriman).  the  Central  of 
Xew  Jersey,  and  the  Atlantic  Coast  line/'  The  total  ex- 
tent of  these  railroads  was  j  9.073  miles. 

Compared  to  the  tortuous  and  difficult  details  of  Mor- 
gan's "  reorganizations,''  the  tale  of  his  I  nited  State- 
bond  transaction  of  1805  is  simple  enough  lo  he  ea-il\ 
n  imprehended. 

As  gold  \vas  the  international  trade  standard  of  value. 

9  Final   Report  of  iht1   Industrial   Commission,   7902,  xix  :  ,308. 


221 


the  I.  ir.tC'l  States  ( lovernnu  nl  followed  tlie  ])olicv  of 
holding  a  certain  amount  as  a  treasury  reserve.  When, 
by  reason  of  some  cause  or  other,  this  reserve  was  de- 
pleted the  Government  was  compelled  to  issue  bonds  to 
replenish  it. 

The  powerful  junta  of  leading  national  and  inter- 
national bankers  definitely  and  deliberately  forced  the 
United  States  Government  to  put  out  these  bond  issues. 
This  the\-  did  by  draining  the  treasury  of  its  gold,  and 
by  then  going  through  the  empty  form  of  selling  back- 
that  gold  in  return  for  bonds.  The  treasury  notes  and 
greenbacks,  comprising  much  of  the  currency  of  the 
Un'ted  States  Government,  were  redeemable  in  coin. 
This  provision  was  construed  as  calling  for  payment  in 
gold.  The  bankers  would  take  over  to  the  sub-treasury 
in  Xew  York  Citv  great  stacks  of  treasury  notes  and 
greenbacks  and  exchange  them  for  gold.  This  gold  they 
would  then  hoard  in  their  vaults.  The  Government  au- 
thorities were  fully  aware1  of  this  proceeding,  and  knew 
quite  well  that  the  ulterior  purpose  was  to  force  a  bond 
issue.  After  the  banking  clique  had  obtained  the  bonds, 
it  could  do  two  things  —  sell  large  amounts  of  them, 
at  enhanced  premiums,  to  smaller  banks,  savings  banks, 
insurance  companies,  estates  and  investors  in  general, 
and  it  could  use  such  portion  of  the  issue  that  is  kept 
as  a  basis  for  issuing  new  currencv.  The  large  private 
bankers,  such  as  Morgan,  had  their  chain  of  auxiliary 
national  banks,  bv  means  of  which  bond  issues  could 
be  converted  into  currencv,  and  the  time-honored  ex- 
tortion of  getting  a  double  interest  could  be  managed. 


bankers.  Their  profits,  it  is  estimated,  reached  tens  of 
millions.  With  the  advent  of  the  year  1895  the  United 
States  Treasury  \vas  again  emptied  of  gold.  Where  had 
the  gold,  which  the  Government  had  purchased  only  a 
short  time  previously  at  usurious  rates,  gone?  The  re- 
ports of  the  large  banks  gave  the  answer.  \\y  the  end 
of  January,  twenty-six  banks  in  Xe\v  York  City  had  in 
their  vaults  a  1:  >ard  of  $^5.000,000  in  gold.  Presently 
the  amount  totaled  8129,000,000,  all  told.  The  Govern- 
ment shrieked  in  helplessness;  J 'resident  Cleveland  was 
reported  as  saying  privately  that  "  the  banks  have  got  the 
country  by  the  throat." 

At  the  appropriate  moment  a  syndicate  of  bankers  ap- 
peared in  the  open  and  magnanimously  offered  to  supply 
gold  to  the  Government  in  exchange  for  bonds.  This 
syndicate  was  composed  of  J.  P.  Morgan  and  Company, 
August  Belmont  and  Company,  representing  the  Roths- 
childs :  James  Speycr,  the  National  City  Rank  and  four 
other  extremely  powerful  national  banks. 

In  the  negotiations  with  President  Cleveland  for  the 
bond  issue.  Morgan's  emissary  and  clever  man  of  law 
was  Francis  Lynde  Stetson,  who  had  been  regular  coun- 
sel for  Morgan  since  1887.  Stetson  had  been  Jacob 
Sharp's  attorney  at  the  very  time  when,  in  1884,  Sharp 
had  bribed  the  Xew  York  Hoard  of  Aldermen  with 
$500,000  to  give  him  a  franchise  for  a  surface  railroad 
on  I'.roadway.  His  activities  in  Sharp's  transactions 
caused  him  to  be  subjected  to  some  severe  questioning 
in  iS8n  by  the  Xew  York  State  Senate  Committee  on 
the  i '.roadway  Railroad.  .After  Sharp  had  successfully 
bribed  the  Xew  York  Aldermen.  F.lkins  and  \\idener. 
who  \vcre  likewise1  bribing  the  Philadelphia  Common 
Council  and  the  Pennsylvania  Legislature,  and  who  be- 
came multimillionaire  -tnet  railway  magnates,  tried 


(although  for  the  time  unsuccessfully),  t<>  lease  the 
Broadwa\  Railroad  lor  a  term  of  999  years,  and  as  an 
earnest  of  good  faith,  deposited  10,000  shares  of  Broad- 
wav  stock,  which  they  had  secured,  with  Drexel,  Mor- 
gan and  Company.10  Morgan  knew  that  every  one  of 
these  shares  was  the  product  of  bribery,  and  that  the 
whole  Broadway  franchise  had  been  so  obtained.  Per- 
haps Stetson's  excellent  and  adroit  work  for  Sharp 
highly  commended  him  to  Morgan. 

After  Cleveland  had  been  defeated  in  his  candidacy 
in  1888  for  a  second  term  as  President  of  the  I'nited 
States,  he  resumed  the  practice  of  law,  and  formed  a 
partnership  with  Stetson.  Cleveland  was  reflected 
President  in  1892;  thereafter  Stetson  was  a  frequent  and 
confidential  caller  at  the  White  House.  These  various 
circumstances  were  much  commented  upon,  and  with 
particular  animadversion,  when  Cleveland  was  virtually 
charged  in  1895  ^'ith  openly  selling  out  the  people 
of  the  United  States  to  the  Morgan  syndicate,  repre- 
sented bv  Stetson. 


KICHTF.KN    MILLIONS    AS    A    GIFT. 


then  compelled  a  bond  is-nie.  and  declared  that  it  alone 
could  supplv  the  required  gold.  This  was  a  transparent 
falsehood.  Main-  members  of  Congress  urged  Cleve- 
land and  John  (I.  Carlisle.  Secretary  of  the  Treasury,  to 
make  the  bond  issue  a  "popular"  one.  By  "popular" 
was  not  meant  the  mass  of  the  people,  who  had  neitlu-v 


;  i;  nor  other  knid  oi  money,  but  trom  tiie  smaHe;'  cap 
ila'i  '.  interests.  Cleveland  and  Carlisle.  ho\ve\  er.  tuiT.-.C 
over  t1ne  862,000,000  of  iour  ])cr  cent,  bonds  to  il:  .• 
Mi  rgan  syndicate  at  the  ])rice  of  104.  The  syndicate 
immediately  resold  the  bonds  to  investors  in  America  and. 
in  Kurope  at  118,  119  and  120,  clearing,  it  was  estimated, 
in  direct  profits,  about  Si8.ooo.ooo.11  This  sum  repre- 
sented the  sum  that  would  have  gone  to  the  Government 
had  the  sale  of  bonds  been  accomplished  without  this 
intermediary  operation.  The  contract  with  the  Govern- 
ment entirely  dictated  by  the  bankers,  headed  by  Mor- 
gan, gave  the  syndicate,  furthermore,  an  option  on  all 
bond  issues  tip  to  October  i,  following,  and  allowed  it 
to  choose  its  own  time  to  deliver  one-half  of  the  total 
amount  in  gold. 

From  every  public  quarter  came  the  severest  denun- 
ciations of  Cleveland,  on  the  one  hand,  and  Morgan,  on 
the  other.  Kvcn  partisan  newspapers  and  periodical 
supporter.-  of  Cleveland  condemned  the  bargain  as  scan- 
dalous, and  declared  that  the  Government  had  been 
shamelessly  "  buncoed."  if.  indeed,  no  worse  charge  could 
be  brought  against  its  chief  executive.1-  His  own  polit- 

:  The  bond  contract  made  with  the  Government,  on  February 
X,  1805,  v.-as  kept  secret  for  some  days.  After  the  issuance  of 
ihe  bonds,  Morgan  personally  superintended  the  receipt  of  the 
bids  at  his  office.  'Ihe  rush  to  buy  bonds  from  him  was  so 
great  that  twenty-two  minutes  after  the  bidding  began,  he  an- 
nounced that  no  more  bids  would  be  received;  that  the  whole 
-uppiy  of  bonds  bad  been  .-old. 

'-Hardly    had    the    gold    reserve    obtained    by    this    $62,000.000 
i.-sue  been  obtained,   than   it   was   again   quickly   drained   by 
the  banker-.      In   the   latter   part  of    1X0.5.   sinister   rumors   spread 
a  new  bond  issue  was  under  way.     These  rumor-  were  con- 
hy  the  is-uance  of  a  private  circular  by  J.   Pierpont   Mor- 
gan   and    Company,   announcing   their   purpose   to    form    a    -yndi 

ver  an  expected  additional  issue  of  $200.000.00.) 
Government  bonds.  Morgan  ai.d  hi-  associates  anticipated  a 
profit  of  $20.000.000.  Kvidently.  Morgan  knew  the  precise 
aniuiuit  the  Government  intended  to  borrow;  when  the  Govern- 


22' 


ical  party  repudiated  Cleveland.  Iktt  a  significant  in- 
sight into  the  indifference  with  which  the  great  magnates 
viewed  storms  of  criticism  was  furnished  by  the  fact 
that  Morgan  ignored  the  denunciation  of  his  acts,  yet 
deeply  and  openly  resented  a  published  description  of 
himself  as  a  "  ruby-visaged  magnate."  He  was  very 
sensitive  as  to  his  facial  deformities. 

So  far  as  strictures  on  his  acts  went,  they  soon  passed 
away,  and  the  very  journals  which  had  been  foremost 
in  verbally  flaying  him.  reverted  to  their  old  sycophantic 
policy  of  extolling  him  as  an  illustrious  financier  and 
philanthropist.  Of  all  the  magnates,  none  had  a  more 
biting  contempt  for  the  newspapers  than  Morgan.  None 
knew  better  than  he  that  whatever  outbreak  they  might 
occasionally  make,  their  course  on  the  whole  could  be 
easily  controlled  by  the  great  propertied  interests. 

NOTHING  FOR  Tin-:  UNEMPLOYED. 

To  realize,  however,  the  full  import  of  the  action  of 
the  Government  it]  this  particular  bond  sale,  by  which  a 

meiH  issued  its  call.  it>  terms  corresponded  with  those  of  the 
Morgan  circular  i>-ned  one  week  earlier.  Such  a  public  uproar 
resulted,  that  Cleveland  and  his  Cabinet  were  compelled  to 
throw  over  the  Morgan  syndicate,  and  the  ne\v  loan  wa^  "pop- 
ularly floated,"  at  a  ravine  to  the  national  treasury  of  SJO.OOQ.- 
ooo. 

It  need  scarcely  he  remarked,  as  a  typical  and  memorable 
fact,  thai  in  hi>  ofticial  correspondence  and  public  statements, 
Morgan  wa<  representing  liimselt  as  actuated  by  "patriotic  con- 
siderations" and  a  de.-ire  to  serve  "the  best  interests  of  the 
(iovernment  and  the  people!''  One  Wall  Street  broker,  in  a 
public  statement,  cynically  described  it  as  "  fascinating  and  lucra- 
tive patriotism."  When  Morgan  wa<  planning  to  get  hold  of 
ihe  new  $j<x;.ooo.coo  loan,  a  barking  friend  asked  whether  he 
could  nol  have  -onie  details  of  the  syndicate's  plans  before  sub- 
scribing. "Can't  give  you  any  particulars."  Morgan  was  quoted 
as  re-ponding.  "  If  you  want  to  make  some  money  and  have 
got  the  gold,  subscribe.  If  not,  au  revoir." 


226         HISTORY    OF    THE    GREAT    AMERICAN    FORTUNES 

present  of  fully  $18,000,000  was  made  to  a  few  bankers 
already  surfeited  with  wealth,  it  is  necessary  to  recall 
the  conditions  among  the  mass  of  people,  especially 
after  the  panic  of  1893.  In  normal  times,  according  to 
the  estimate  of  Carroll  D.  Wright,  for  some  years  United 
States  Labor  Commissioner,  the  number  of  unemployed 
at  any  one  time  was  about  1.000,000  men.  women  and 
children.  After  the  panic  of  1893  the  number  reached 
perhaps  3,000.000.  Xot  a  finger  was  lifted  by  the  Gov- 
ernment in  the  aid  of  any  of  these,  nor  was  the  remotest 
consideration  given  to  means  for  alleviating  this  misery 
or  to  the  causes  producing  it.  Repressive  measures  were 
used  to  suppress  street  meetings  of  protest,  and  leaders 
fit  labor  unions  were  Hung  into  prison  on  the  alleged 
charge  of  contempt  of  the  Federal  courts.  Only  the 
year  before,  in  1894.  the  regular  army  had  been  ordered 
out  by  Cleveland  against  the  railroad  workingmen  on 
strike.  Xowhere  and  in  no  respect  did  Government  do 
other  than  carry  out  the  demands  made  by  the  great  cap- 
italists who  dominated  all  of  its  functions. 


CHAPTER  X 

MORGAN  THE  "  PEERLESS  CAPTAIN  OF  INDUSTRY  " 

With  the  advent  of  the  year  1898  an  epochal  move- 
ment for  the  consolidation  and  centralized  ownership  of 
transportation  systems,  industries,  public  utility  plants 
and  mines  set  in.  The  trust  era  was  now  in  irresistible 
swing.  After  a  warfare  of  nearly  thirty  years  in  the 
courts  and  in  the  active  political  and  industrial  arena, 
the  middle  class  found  itself  completely  frustrated. 

Eight  years  previously,  in  180,0.  what  was  exuberantly 
heralded  as  a  notable  triumph  had  been  secured  in  New 
York  State.  The  courts  there  had  declared  the  Sugar 
Trust  illegal  under  the  common  law  provision  that  no 
corporation,  through  its  stockholders  or  otherwise,  had 
power  to  give  over  its  rights,  powers  and  duties  to  a 
board  of  directors.1 

The  middle  class  jubilantly  declared  that  no  trust 
could  survive  so  fundamental  and  sweeping  a  decision. 
l>ut  a  new  surprise  was  in  store  for  that  class.  Instead 
of  showing  any  trepidation  or  preparing  tor  their  dissolu- 
tion, such  trusts  as  were  then  in  existence  received  the 
decision  with  most  irritating  equanimity,  and  serenely 
proceeded  to  perpetuate  their  corporate  selves  by  don- 
ning a  new  legal  garb.  They  not  only  continued  to  wax 
great  and  powerful,  but  the  Sugar  Trust,  in  particular, 
with  the  llavemeyers  at  its  head,  carried  on  continuously 
a  colossal  system  of  frauds  upon  the  ( lovernment  in  the 

The  North  River 


_;_'o         iilSTuUY    OF    TIIK    GUH.Vi     AMERICAN    FORTUNES 

fraudulent  weighing'  of  imported  sugar.  These  frauds 
rxlended  over  a  long  series  of  years,  and  it  was  estimated. 
\vhen  the  facts  became  public  in  1909,  that  the  amount 
of  which  the  Government  had  been  thus  defrauded 
readied  fully  tens  of  millions  of  dollars.-  In  addition  to 
these  monumental  swindles,  the  Sugar  Trust  continued  so 
absolutely  secure  in  its  monopoly  that  it  was  easily  able 
to  crush  all  competitors,  dictate  tariff  schedules,  and 
extort,  in  the  course  of  trade,  an  annual  profit  placed  by 
some  authorities  at  855,000.000  a  year,  or  a  total  of 
$660.000,000  in  profits  in  the  period  from  its  organiza- 
tion to  1909. 

Speaking-  in  a  large  political  sense,  a  last  stand  was 
made  by  the  middle  class  in  the  Presidential  campaign  of 
1896.  That  was  its  great,  although  not  really  final, 
attempt  to  defeat  the  plutocracy,  and  conquer  the  powers 
of  government  for  ii-  own  policies.  I  nder  the  leader- 
ship of  Bryan  the  Democratic  I 'arty  declared  itself  radi- 
cal and  tremendously  and  sincerely  earnest,  but  its  so- 
called  radicalism  was  in  essence  a  reactionary  futile  ef- 
fort to  extinguish  the  trusts  and  reestablish  the  old  con- 
fusing competitive  conditions  in  the  production  and  dis- 
tribution of  goods.  It  was  a  bitterly-contested  campaign 
in  which  immense  sums  of  money  were  corruptly  dis- 

-. \fter  the  Government  had  proved  beyond  dispute  the  com- 
mission of  these  great  frauds,  the  American  Sugar  Refining 
Company,  as  heretofore  noted,  paid  more  than  $2,000.000  to  the 
government  in  April,  1909,  as  restitution  for  its  swindles.  I'.ut 
this  $ _v<x>.ooo  covered  only  a  mere  part  of  the  long-continuing 
frauds.  .None  of  the  beneficiaries  of  these  thefts  were  punished; 
punishment  of  a  few  obscure  customs  weigher.-  and  some 
<  '"  the  trust's  employe?  was  the  only  action  taken.  The  di- 
'  1  irs  of  the  Sugar  Trust  were  also  indicted  in  1009,  it  is  true. 
The  indictment,  however,  wa--  not  for  the  customs  frauds,  but 
for  violating  the  Federal  ami-tru-t  act  —  a  meaningless  indict- 
ment, cuiiviction  upon  which  carries,  in  practice,  a  nominal  tine 
only. 


"  PEERLESS    CAPTAIN    OF    INDUSTRY  " 


tributcd  by  the  money  interests  of  the  Republican  Party 
to  defeat  Bryan  and  the  middle  class. 


TIIK    PLUTOCRACY    INT    FULL    POWER. 

McKinley's  election  as  President  of  the  United  States, 
with  a  Congress  the  majority  of  which  was  of  his  views, 
was  a  distinct  notification  that  the  plutocracy  was  in  full 
power — a  power  won  in  a  pitched  combat,  and  there- 
fore interpreted  as  a  popular  approval  of  the  rule  by 
great  magnates  and  trusts. 

Henceforth,  it  \vas  well  understood,  the  trusts  need  fear 
no  governmental  antagonism,  even  of  a  sham  order;  for 
while  mock  legal  actions  at  no  time  impaired  the  basic 
sway  of  the  trusts,  yet  they  caused  constant  annoyances 
and  expense. 

When  McKinley  took  office  magnates  of  every  descrip- 
tion knew  that  the  trust  movement  had  full  license,  con- 
firmed by  private  bargain,  to  go  on  unhindered  and  un- 
molested, except,  perhaps,  with  an  occasional  inroad  for 
spectacular  popular  effect.  Consequently  the  business  of 
organizing  trusts  flourished  in  the  open  ;  one  trust  after 
another  was  formed  embracing  about  every  known  prod- 
uct. The  work  was  carried  on  with  phenomenal  celerity 
and  success.  The  middle  class  looked  on  impotently 
while  factories,  railroads,  gas  and  electric  plants,  street 
railway  lines,  telephone  systems  and  mine.-  were  con- 
verted from  a  state  of  individual  or  mere  corporate  owner- 
ship into  the  trust  form,  owned  by  great  single  corpora- 
tions with  stupendous  amounts  of  capital,  and  with 
dictatorship  over  vast  masses  of  workingmen. 

In  this  revolutionary  work,  that  of  organizing  trusts. 
].  Pierpnnt  Morgan  was  one  oi"  the  foremost  gcncralissi- 
mns.  Indispensable  ;:-:  it  is  in  this  \vork  to  describe  the 


230         HISTORY    OF    THE    GREAT    AMERICAN    FORTUNES 

methods  by  which  he  requisitioned  his  wealth,  it  is  no 
less  necessary  to  point  out  the  services  that  he  and  his 
kind  were  doing  for  progress.  In  the  exclusive  considera- 
tion of  progressive  movements,  it  is  immaterial  what  the 
motive  was ;  the  thing  done  is  all  that  counts  historically. 
Xone  can  deny  that  these  revolutionary  capitalists  were 
actuated  wholly  by  ambitiously  personal  ends :  greed,  pelf 
and  the  lust  of  power.  But  after  all  they  were  revolu- 
tionists without  knowing  it,  and  precisely  the  sort  of 
capitalist  revolutionists  needed  at  that  particular  time. 

Strong,  ruthless  men,  bold  in  cunning  and  cunning  in 
their  boldness,  were  required  for  the  work  of  crushing 
out  the  old  cut-throat,  haphazard,  individualistic  com- 
petitive system.  That  sluggish,  money-grabbing,  petty- 
minded  body,  the  middle  class,  preoccupied  with  the  com- 
fort of  its  bellv  and  with  its  narrow  conventions,  had  set 
its  self-interest  against  the  demands  of  progress.  It  de- 
clined to  budge  ;  it  hedged  itself  behind  walls  of  special 
laws  ;  it  -ought  to  make  matter-  travel  backward.  Under 
these  conditions  Morgan  and  his  colleagues  were  the  men 
for  the  task:  forceful,  dominating,  arbitrary  men,  not 
scrupling  at  any  means  to  attain  their  ends,  contemptuous 
enough  of  law  when  it  stood  in  their  way.  and  powerful 
enough  to  defy  it.  Very  expert  destructionists  were 
they.  Hut  they  were  also  constructionists.  They  tore 
down  to  build  up.  A  decayed,  archaic  industrial  system 
ihev  replaced  with  one  of  a  far  more  systematic  order, 
the  forerunner  of  finer  systems  to  come.  Progress  often 
works  through  queer  instruments. 

In     the    year-    closelv    following     1898    Morgan    was 
iall}    prominent   in    many   of   these   trust    creation-. 
\n    ubiquitous   magnate   he   was.   pushing   his   industrial 
commest-    and    overlordship    in    many    variegated    direc- 
tion-.     F.arli  arrnniulntinij  -ncce-s  added  millions  of  dol- 


PEERLESS    CAPTAIN    OF    INDUSTRY  23! 

lars  to  his  fortune.  With  a  choice  list  to  select  from. 
what  brilliant  display  of  his  financial  acumen  shall  we 
take  up  first?  Consecutively,  the  most  pertinent  is  that 
noted  Pennsylvania  Coal  Company  transaction  of  his. 


THE    UNFAILING    RECIPE    FOR    MAKING    MONEY. 

The  plan  which  he  had  begun  some  years  before  of 
gathering  in  coal  mining  properties  and  coal  carrying  rail- 
roads, and  of  merging  them  into  a  combination,  he  per- 
sistently continued.  The  most  important  of  all  of  the 
remaining  independent  companies  in  the  Pennsylvania 
anthracite  region  was  the  Pennsylvania  Coal  Company. 
It  controlled  some  of  the  most  valuable  mines  in  the 
center  of  the  richest  deposits.  While  paying  wretched 
wages  to  its  workers,  it  had  for  years  been  reaping 
sixteen  per  cent,  dividends  on  a  capital  of  $5,000,000. 
Stowed  away  in  its  treasury  it  had.  in  the  form  of  a 
surplus,  a  fund  of  Sio.ooo.ooo. 

Here  was  a  noble  opportunity.  Could  any  alert 
financier  with-tand  the  temptation?  As  soon  as  Morgan 
acquainted  himself  with  the  attractive  facts,  a  plan  of 
campaign  speedily  developed.  lie  sent  agents  to  scour 
the  northeastern  region  of  Pennsylvania,  with  orders  to 
pav  anv  price  demanded  for  -hares  Of  flu-  Pennsylvania 
Coal  Company.  I'nobtrnsively  these  discreet  emissaries 
went  about  their  mis-ion.  l;or  month-  they  traversed 
Pennsylvania,  finally  getting  enough  stuck  to  insure  Mor 
gan's  control,  for  which  stock  an  average  price  of  $;^j 
a  share  was  paid. 

\Yhat  did  Morgan  next  do?  lie  sold  the  property  to 
the  Krie  l\ailroad  Company  for  $32.000,000.  This  pay- 
ment was  in  the  form  of  four  per  cent,  collateral  tru-t 
bonds  -(.-cured  bv  mortgages  on  the  Pennsylvania  Coal 


23-         IlisTOUY    OF    THE    GREAT    AMERICAN    FORTUNES 

Company's  property  and  by  the  Xe\v  York,  Susquehanna 
and  Western  Railroad,  a  line  acquired  a  short  time 
previously  by  ti/.-  Erie.  Xor  was  this  all;  an  issue  of 
$5,000,000  of  preferred  stock  was  thrown  in.  But  who 
controlled  the  Erie  Railroad?  The  eminent  J.  Pierpont 
Morgan.  As  an  individual  he  bought  the  coal  property, 
and  then,  as  dictator  of  the  Erie  Railroad,  decided  what 
he  should  be  paid  for  it. 

"  Criticism,"  observed  the  Industrial  Commission,  with 
the  dainty  restraint  characteristic  of  all  such  euphemistic, 
official  reports.  ''  has  been  directed  against  this  operation 
on  the  ground  that  the  price  paid  by  the  Erie  Railroad 
to  J.  P.  Morgan  and  Company  was  excessive.  Testi- 
mony before  the  Industrial  Commission  indicates  th\< 
was  in  fact  the  highest  price  paid  for  such  properties  in  the 
history  of  the  business.'3  What  this  Commission  feebly 
and  so  gently  dismissed  as  "  criticism  ''  was,  in  reality, 
a  general  growl  of  indignation  at  Morgan's  ease  and 
audacUy  in  calmly  transferring  to  himself  millions  of 
dollars  in  so-called  "  profits."  It  was  of  this  kind  of 
transaction  and  similar  varieties  that  the  Industrial  Com- 
mission elsewhere  relieved  itself  of  this  declaration: 
"  The  possibilities  of  fraudulent  profit  are  something 
enormous  under  such  conditions."'  For  once,  in  mak- 
ing this  clear  statement,  the  Industrial  Commission  almost 
overcame  its  habitual  timidity  of  phraseology,  and  called 
thing:-;  by  their  true  names.  Vet  what  availed  it  to  say 
that  fraud  was  fraud  when  the  beneficiaries  were  not  even 
questioned  bv  law?  The  amount  pocketed  by  Morgan  in 
this  performance  cannot  be  learm-d.  'To  what  extent 
profit  rose,"  the  Industrial  Commission  >at- 


"  PEERLESS    CAPTAIN    OF    INDUSTRY  ''  233 

testimony  before  the  Commission."  5     We  may  well  judge 
that  the  profit  could  be  estimated  in  millions. 


THWARTED   BY  A  GREATER   MAGNATE. 

While  in  control  of  the  Eric  Railroad,  so  rich  with 
memories  of  Jay  Gould's  frauds  and  thefts,  Morgan  un- 
expectedly, and  to  his  deep  mortification,  ran  plump  into 
his  first  great  defeat.  It  came  about  in  his  attempt  to 
put  through  a  railroad  juggling  operation.  Had  it  been 
successful  he  would  have  been  able  to  appropriate  the 
bulk  of  at  lea.st  $10,000,000  in  ''  profits."  The  plan  was 
the  typically  fraudulent  one  common  among  the  magnates 
of  buying  in  a  railroad  and  then  unloading  it  (to  use 
the  financial  slang  of  the  day)  upon  a  trunk  railroad 
system  controlled  by  both  buyer  and  seller. 

Morgan  had  .--ecnred  a  controlling  interest  in  the  Cin- 
cinnati, Hamilton  and  Dayton  Railroad.  This  line  was 
composed  of  a  number  of  former  separate  railroads  and 
of  various  leased  railroads.  On  September  20,  1905.  the 
Erie  Railroad  bought  this  interest  from  a  syndicate 
headed  by  J.  P.  Morgan  and  Companr.  The  Erie  direc- 
tors, all  registers  of  Morgan's  orders,  authorized  the 
issuing  of  $12,000.000  of  four  per  cent,  bonds,  convert- 
ible into  Erie  common  stock  at  f>o,  to  pay  Morgan  for  the 
Cincinnati.  Hamilton  and  Dayton  Railroad.  Thus  far  the 
program  had  slipped  on  smoothly. 

Suddenlv  came  evidences  of  the  most  powerful  opposi- 
tion from  quarters  commanding  obedience.  Xntice  was 
-erved  that  the  Erie  director-  must  revoke  their  action. 
If  they  refused,  costly  reprisals  would  follow  n<>t  only  in 
litigation  but  by  the  application  nf  a  pressure  that  they 
resist.  l;rom  \vh  .•  /;  '.  ;hi-  mighty  edict  come  ? 

•''   '     ;       '      f  ;1       '.  •    :        ••  •  4(10. 


-'34 

Who  \vas  the  awe-inspiring  magnate  that  could  frighten 
.Morgan  into  retreat? 

His  identity  never  came  out  publicly,  but  the  sur- 
misc  was  rooted  in  Wall  street,  that  he  was  none  other 
than  E.  II.  Harriman.  The  belief  prevailed  that  llar- 
riman,  representing  the  Standard  Oil  oligarch}',  was  seek- 
ing to  get  control  of  the  Erie  Railroad  himself,  and  that 
it  was  to  his  interest  at  that  particular  juncture  to  thwart 
.Morgan.  The  sequel  has  borne  out  that  conviction :  the 
Eric-  Railroarl  later  passed  under  Harriman's  control.6 
Whatever  was  the  nature  of  the  secret  means  used  to 
compel  Morgan  to  face  about,  and  whoever  it  was  that 
used  them,  they  were  entirely  effective.  The  Erie  di- 
rector- meekly  rescinded  their  action,  and  the  prospec- 
tive $10,000,000  in  "  profits  "  vanished  like  a  dream. 


What  became  of  Morgan'-  Cincinnati,  Hamilton  and 
Dayton  Railroad  after  he  was  forced  to  take  it  back?7 
This  system,  which  he  had  been  on  the  very  point  of 
-elling  to  his  Erie  Railroad  at  a  price  so  extravagant  as 
to  cause  astonishment  even  among  the  veteran  manipu- 

r'  In  a  li-t  ma<le  public  by  the  Inter-tate  Commerce  Commission 

ir,    fanuary,    10.00.,  of  the  lar.u'c  railroad   stockholders.  J.   P.   ,\lor- 

name   did   not   openly  appear  as   a   stockholder   of  the   Erie 

Railroad.      l!tit  Walter  1!.  Horn,  a  clerk  in  hi-  office.  \va-  creditefl 

'•  u  $14.502/100  of  it.-   stock,  and  the  firm  of  J.   S.   Mor- 

and     Co.,    of     London,    about    $2.000.000    worth.      Ilarriman 

•tin  d  control  of  the  Hric   Railroad  in    ioov. 

"  Moody's   Mannai"   for   njoH  (  pa. tee  2,50)   thus  skim1-  over  thi- 
affair:      "In    September,    1905.    the    Krie    Railroad    Company    ac- 
quir-.-d    a    controlling   interest    in    the   stock   of   thi-   company    Ithc 
('..    II.    \-    I).    R.    R.    Co  |    and    the    juri-diction    of   the    Kr'r    nffi 
rled   to  the  line-  of  thi-  company;  but  in   Novem 
•  year    Mr.   J.    !'.    Martian   relieved   the    F.ric    Rail 
road    (     •      •••.    of    all    it-    obligations    in   the    matter   and    the    C., 
H.  S    !)    riffiria1     resumed  tiir  operation  of  their  lines." 


"  i'EliULL.SS    CAl'TAiX    OF    1XUUSTKY  235 

lators,  was  thrown  into  bankruptcy  in  about  a  month 
after  the  attempt  had  fallen  through. 

On  December  4,  1905,  Jucison  Harmon,  one  of  cx- 
President  Cleveland's  intimates,  was  appointed  receiver 
of  the  railroad,  including  its  auxiliary  lines,  the  Pere 
Marquette  Railroad  and  the  Toledo  Railway  and  Ter- 
minal Company.  Years  of  litigation  followed.  One  as- 
pect of  these  legal  rights  was  the  charge  in  court  that 
Morgan  had  used  fraud  in  getting  back,  into  an  owner- 
ship more  absolute  than  before,  this  Toledo  Railway  and 
Terminal  when  it  was  sold  in  bankruptcy.  The  lesser 
stock  and  bondholders  furiously  protested  against  the 
species  of  reorganization  that  virtually  deprived  them  of 
their  holdings  and  struck  their  bits  of  wealth  from  them. 
l!ut  although  they  harried  Morgan  by  a  series  of  law- 
suits, he  swept  them  inexorably  out  of  his  way.  And 
with  what  net  result?  Under  his  distinguished  plan  of 
reorganization,  so  >tyled.  the  new  stock  issued  will  be 
tight-handedly  bound  up  for  seven  years  in  a  voting 
trust  of  which  Morgan  will  have  dictatorial  control  to  do 
as  he  minds  with  the  Cincinnati.  Hamilton  and  Dayton 
Railroad.  Moreover,  absurd  as  it  mav  seem,  his  com- 
mission for  "  reorganizing  "  the  railroad  in  such  a  man- 
ner as  to  force  out  the  small  stockholders  and  concen- 
trate ownership  largely  in  himself,  will  probably  be  sev- 
eral million  dollars.  He  stands,  therefore,  partially,  if 
not  virtually,  recouped  for  the  evaporation  of  that 
$10,000,000  in  1905. 

In  ciillo(|uia!  parlance,  this  "  freezing  out  ''  of  small 
capitalist  stockholders  ha<  been  one  of  the  most  conspic- 
uous and  inevitable  accomplishments  of  the  triumphant 
progress  oJ  our  magnates.  \\  e  have  remarked  how  the 
Vanderbilts,  Jay  Could.  Sage,  lluntington  and  other 

if  the 


236         HISTORY    01"    THE    GREAT    AMERICAN    EORTUXES 

small  parasites  —  nonentities  when  compared  with  the 
great  grandees  —  would  emit  a  dolorous  wail,  burst  out 
into  lamentations  and  accusations  of  fraud,  and  appeal 
for  sympathy  and  succor.  So  long  as  they  could  defraud 
others,  and  reap  wealth  out  of  the  sufferings  and  deg- 
radations of  the  working  class,  all  was  properly  blissful. 
When  they  profited  from  fraud  it  was  "  good  business." 
but  when  fraud  was  used  against  them  it  was  denounced 
as  criminally  pernicious. 

In  disposing  of  them  no  magnate  was  more  proficient 
than  Morgan.  In  1903  the  stock  of  the  Chicago  North- 
western Railroad  was  selling  at  the  market  price 
of  295x8.  and  a  large  number  of  persons  of  means  —  mer- 
chants, professional  people,  legatees  and  others  —  held 
shares  of  that  stock  as  an  investment. 

The  railroad  was  then  put  through  the  usual  astring- 
ent process  of  "  reorganization.''  In  all  of  these  re- 
organization devices,  reasons  are  found  for  levying  a 
heavy  assessment  upon  the  stockholders.  These  levies 
are  for  the  ascribed  purposes  of  paying  the  expenses 
of  the  "  reorganization,"  legal  expenses,  advertising, 
and  millions  in  commission  to  the  reorganizers.  The 
assessments  are  frequently  so  onerous  that  the  minor 
stockholders  cannot  afford  to  pay  them  :  consequently.  In- 
explicit provision,  their  stock  becomes  forfeited.  From 
29.^8  tne  ^tock  went  down  to  Si  (July.  1909)  :  and  what 
with  declines  of  price  and  assessments  thousands  of  in- 
dividuals have  been  forced  to  part  with  their  stock. 
Who  got  hold  of  that  ,-tock?  The  question  is  really 
superfluous.  The  stock  was  put  into  a  "  voting  trust." 
with  autocratic  power  for  five  years,  and  in  command 
<  iver  all  -tamls  Morgan. 

Thi-  Damping  out  of  crowds  of  relatively  small 
stockholders  went  on  so  constantly  that  it  iinallv  becanu 


\vhcn  it  \vas  blended  with  v;h;it  \vevo  considered  dramatic 
cirru  mstanc.es.  did  it  call  forth  uncommon  notice.  But 
\vhile  each  of  :hj  magnates  was  busily  flinging  out  these 
hindrances  and  expropriating  their  property,  he  had  to 
be  on  ceaseless  guard  against  the  incursion  of  some  other 
magnate  or  of  a  combination  of  magnates.  Incessant 
vigilance  was  imperative. 

The  warfare  was  necessarily  a  complex  one,  with  its 
paradoxical  aspects.  The.  magnates  fought  the  working 
class,  and  the  working  class  fought  back,  sometimes  ag- 
gressively, at  other  times  on  the  defensive.  Toward  the 
middle  class,  however,  the  magnates  were  forced  to  use 
a  double  objective  set  of  tactics.  They  had  to  crush  the 
middle  class  and  take  its  property  away,  either  by  direct 
spoliation  on  the  one  hand,  or  on  the  other,  by  inveigling 
its  elements  into  investing  their  funds  in  great  stockjob- 
bing enterprises  which  subsequently  turned  out  to  be 
adroit  swindles.  In  surveying  this  war  of  the  classes  the 
most  remarkable  phase  has  been  the  ease  with  which  the 
great  moneyed  interests  have  traded  on  the  shortsighted 
cupidity  of  the  middle  class.  With  the  naive  expecta- 
tion that  the  magnates  would  fraternally  and  benevo- 
lent!}- create  riches  for  it.  the  middle  class  has  poured 
its  collective  wealth  into  their  schemes,  only  again  and 
again  to  find  that  very  wealth  wrenched  from  it,  and 
used  to  bring  about  its  extinction  as  a  class. 

Surmounting  these  forms  of  the  conflict  in  society  was 
the  titanic  warfare  among  the  magnates  to  hold  back 
one  another  or  to  seize  from  the  other  spoils  each  had 
seized  from  the  multitude  below.  When  the  interests 
of  these  lords  of  finance  and  industry  clashed,  then  the 
thunderbolts  rlew. 


238 

Such  a  battle  notably  occurred  in  1901.  From  what- 
ever point  of  view  it  is  considered,  sociologically,  philo- 
sophically or  historically,  it  was  an  event  full  of  curious 
instruction.  It  symbolized  a  new  order  of  things;  be- 
tween it  and  the"  times  when  feudal  dukes  and  barons 
and  kings  rushed  to  arms  to  settle  their  quarrels  of  self- 
interest,  lay  a  long  and  broadening  gap.  These  modern 
battles  also  carry  their  wake  of  ruination  and  death,  but 
it  is  so  indirect  as  not  to  be  outwardly  observable.  The 
weapons  are  money,  reinforced  by  cunning  and  fraud; 
very  powerful  weapons  which  none  in  these  days  have 
been  able  to  withstand.  Under  the  old  system  the  feudal 
lord  lost  caste  if  he  did  not  light  in  person  ;  success  might 
often  mean  his  own  death.  But  no  bodily  risk  is  entailed 
to  confronting  money  monarchs  of  these  present  happy 
days;  they  can  make  wealth  fight  for  them  in  the  stock 
markets;  and  if,  perchance,  it  becomes  necessary  for 
them  to  determine  their  quarrels  with  capitalists  of  other 
countries  by  force,  they  can  impress,  through  their  gov- 
ernments, the  working  class,  led  by  men  trained  by  those 
governments  in  the  art  of  slaughter,  to  do  their  fighting. 
Happen  what  will,  their  hides  are  safe. 

A     MATTLK    OK     MACNATF.S. 

The  daily  routine  budget  of  news  in  May,  K)Oi.  was 
suddenly  enlivened  by  the  reports  that  an  array  of  great 
magnates  had  rushed  headlong  into  a  fractious  conten- 
tion. There  was  unwonted  commotion  in  high  places. 
Morgan.  James  J.  Hill,  the  Rockefellers  and  Harriman, 
the  Vanderbilts  and  other  superlative  eminences  were 
entangled  in  warfare.  Here  was  rousing  news,  indeed. 
\\hat  was  the  meaning  of  this  furor  among  the  exalted? 
How  did  il  begin  and  where  would  it  end? 

The   cause    was    I  fill'-    aifcmpt    to   undermine    the    in- 


terest>  of  the  other  magnates  concerned.  (  Obviously  tin- 
was  an  act  properly  calling  for  retaliatory  measures.  h> 
his  antocracv  over  the  <  ireat  Xorlhern  Railroad,  a  line 
extending  through  the  Xortlnvest  and  Canada.  Mill  had 
recently  added  a  leading  interest  in  the  Xorlhern  Pacific 
Railroad,  which  traversed  parallel  territory.  The  incep- 
tion and  construction  of  the  Xorthern  1'aciiic  Railroad 
were  rq)lete  with  the  usual  corruption  and  jobbing,  and 
with  thefts  of  vast  areas  of  agricultural,  timber  and 
mineral  land-.  This  corruption  will  lie  hereafter  dealt 
with.  I 'hindered  by  various  financiers,  the  Xorthern 
Pacific  had  been  forced  into  bankruptcy.  Hill  had  then 
obtained  control. 

His  vista  now  widened.  Why  should  he  not  have  a 
direct  share  of  the  immense  traffic  converging  at  Chi- 
cago? To  get  this,  he  set  out  to  manipulate  himself  into 
control  of  the  Chicago.  Burlington  and  Ouincy  Railroad. 
This  move  alarmed  competitive  magnates ;  they  at  once 
saw  how  the  interests  of  their  railroads  in  the  North- 
west and  West  would  certainly  be  jeopardized.  How 
could  they  ward  it  oft.  or  at  least  neutralize  its  results? 
The  most  feasible  plan  presenting  itself  was  to  attack 
him  on  his  own  ground.  With  good  strategy  they  be- 
gan buying  Xorthern  Pacific  stock.  This  would  give 
them  a  voice  in  one  of  his  own  railroads.  While  Har- 
riman.  supported  bv  the  Standard  Oil  oligarchv,  wa- 
doing  th\<.  Hill  was  straining  him-elf  to  buv  in  more  and 
more  Xorthern  Pacific  stock,  and  Morgan  was  deep  in 
the  stockjobbing  fray  to  safeguard  his  own  extensive 
interests. 


limes  a.-  much  as  twenty-three  points  a  day,  reaching 
£300  a  share,  and  for  a  part  of  one  clay,  Si.ooo  a  share. 
A  "  corner  "  surpassing  in  magnitude  an}-  previously 
known  in  railroad  stock  resulted.  "  The  sacrifices  neces- 
sary to  secure  funds  for  covering  contract.--,''  says  the 
Inch;.-! rial  Commission,  "  precipitated  a  panic  of  wide- 
spread proportions."  s  Thousands  upon  thousands  of 
lesser  stockholders  of  other  railroad  securities  were 
caught  in  the  whirligig  and  ruined ;  as  fast  as  the  quo- 
tations of  Northern  Pacific  stock  went  on  increasing, 
those  of  other  railroad  stocks  precipitately  declined. 

The  upshot  of  this  warfare  might  have  been  expected. 
The  Standard  Oil  clique  came  out  of  it  with  augmented 
dominancy.  and  with  added  power  in  a  region  where 
previously  it  had  not  been  so  strong.  While  the  country 
resounded  with  the  mournful  outcries  of  a  scattered  host 
of  petty  stock  speculators,  clawed  out  of  their  insignifi- 
cant fortunes,  the  contending  magnates  amicably  decided 
to  arrange  a  new  understanding.  The  disputed  territory 
should  be  nicely  partitioned  among  them,  and  affairs 
would  be  made  tranquilly  satisfactory.  A  ''  gentlemen's 
agreement,"  otherwise  phrased  "  a  community  of  inter- 
est," would  cement  their  brotherly  relations.  Such  a 
covenant  would  choke  out  competition,  and  simplify  and 
enlarge  the  pleasant  work  of  squeezing  more  tribute 
from  the  people. 

Who  was  lo  be  chosen  as  arbiter?  Whose  was  the 
fust  mind  to  be  entrusted  with  the  selection  of  the  new 
director-  of  the  Northern  Pacific  Railroad?  Morgan 
was  the  man  chosen  for  the  adjustment.  No  vague 
"  gentlemen'-  agreement  "  fur  him  however,  when  some- 

s  Final    Report    of    Imlu-irial   Co:r,mi:-sion.  xix:3!7. 


"  L'liKKI.KSS    CAPTAIN    OF    INDUSTRY  24'< 

thing  better  could  be  substituted.  He  conceived  the  ide -\ 
of  a  huge  holding  company,  an  incorporated  body  to  hold 
title  to  both  the  Great  Northern  and  the  Northern  Pa- 
cific railroads.  The  Northern  Securities  Company  was 
thereupon  organized  with  a  capital  of  $400,000,000. 

Upon  the  announcement  of  this,  the  people  of  the 
Northwest  bestirred  themselves  in  vehement  protest. 
Were  they  not  oppressed  enough  already?  So  crushing 
a  monopoly  must  not  be  permitted,  they  declared ;  it 
would  hold  them  in  absolute  thralldom ;  suit  must  be 
brought  to  void  it.  The  United  States  Government  did 
bring  such  a  suit  and  pressed  it.  The  motive  for  the 
great  energy  and  ability  shown  in  its  prosecution  has 
never  been  made  clear.  \Yas  it  to  the  secret  interests  of 
certain  powerful  magnates  to  break  up  the  Northern 
Securities  Company?  The  Supreme  Court  of  the 
United  States  decided  that  it  was  an  illegal  corporation, 
But  —  and  these  buts  always  supervene  —  although  the 
company  formally  and  decorously  disolved,  the  principle 
upon  which  it  was  formed  practically  remained  in  force 
by  virtue  of  another  ''  gentlemen's  agreement."  The 
court  mandate  was  one  thing;  its  enforcement  against 
the  fundamentals,  quite  another.  Rut  the  form  of  dis- 
solution had  been  gone  through  and  the  law  thereby  was 
considered  satisfied. 

Thus,  this  decision,  hailed  by  the  middle  class  as  a 
critical  defeat  for  the  trusts,  was  after  all  nothing  but 
empty  phraseology.  Even  while  these  opponents  of  the 
trusts  were  gleefully  praising  the  Supreme  Court  of  the 
United  States  as  "  the  bulwark  of  freedom  of  trade," 
the  trusts  caused  Congress  to  enact  a  law  which  knocked 
over  the  main  prop  upon  which  the  middle  class  had  beer, 
depending  in  its  war  upon  the  great  centralized  corpora- 
tion^. 


242          HISTORY    01-     Till':    OKKAT     A  M  KK1CAX     KlKTTNKS 

For  more  than  a  decade  trust  organizers  had  been 
confronted  with  a  national  law  decreeing  fine  or  im- 
prisonment or  both  upon  conviction  for  engaging  in  any 
act  in  restraint  of  trade.  Xone  had  gone  to  prison,  nor 
controlling  the  entire  functions  of  government,  as  they 
did,  was  there  any  prospect  of  the  visitation  of  such  a 
punishment.  But  the  imprisonment  clause  was  a  con- 
stant irritant :  why  have  it  on  the  statute  books  when  it 
could  easily  be  obliterated  ?  And  why  not  also  have  a 
specific  declaration  of  immunity ':  A  solitary  provision 
calling  for  fine  in  case  of  conviction,  the  magnates  did 
not  mind  at  all.  Lt  would  give  an  appearance  of  defer- 
ring to  public  sentiment  and.  at  the  same  time,  could  be 
well  regarded  jocularly  by  those  at  whom  it  was  directed. 
When  trust  magnates  were  gathering  in  immense  sums 
from  illicit  acts,  what  did  a  fine  of  a  few  thousand  dol- 
lars matter?  It  was  too  trivial  to  bother  over.  V'esides. 
even  if  the  fine,  by  some  extraordinary  possibility  were 
made  heavv.  it  could  be  assessed,  in  turn,  upon  the  con- 
sumer. 


act  passed  bv  ( 'ongres<  in  K.K\V  Concurrently,  ihe  same 
net  reasserted  and  amplified  the  principle  of  granting 
immunity  to  trust  officers.  \o  matter  how  much  or  how 
often  thev  violated  tin-  anti-tru-t  laws,  they  were  now 
absolutely  secure  from  anv  po-sibililv  of  prison  sentence. 
'I  IH  ( iovernment  might  examine  them  with  the  great- 
er pretended  inquisitivencss.  and  in  the  proce«  draw 
out  the  mo-t  self-incriminating  admissions,  but  this  evi- 
dence a-  testimony  could  not.  by  the  act  of  1003.  be  used 


PEERLESS    CAPTAIN    OK    IXDISTKY 

against  them  in  the  trial  of  any  criminal  proceeding. 
Not  only  was  the  individual  exempted;  the  corporation 
itself  \vas  distinctly  relieved  from  prosecution  for  any 
penalty  or  forfeiture. 

The  triumph  of  the  trusts  was  now  intrinsically  com- 
plete. 


CHAPTER  XI 
MORGAN  AT  HIS  ZENITH 

By  the  end  of  the  year  1902  J.  Pierpont  Morgan,  reck- 
oning by  appearances,  seemed  to  outrank  every  other 
American  magnate;  scarcely  a  day  passed  that  the  news- 
papers did  not  report  some  new  achievement  of  his,  or 
obsequiously  render  tribute  to  his  ever-expanding  power. 
In  the  public  appraisement  he  bulked  as  a  supervitally 
preponderant  man,  a  figure  standing  out  with  an  im- 
mense and  peculiar  distinction,  eclipsing  the  most  obtru- 
sive political  and  industrial  functionaries. 

Contra>ted  with  him,  ostensible  political  rulers  were 
innocuous  ephemeral  personages.  For  a  time  they 
might  vociferously  command  attention,  but  their  encumb- 
ency  was  dependent  upon  the  will  of  the  magnates,  and 
they  were  pushed  up  or  pulled  down  as  suited  the  policy 
and  purposes  of  the  great  propertied  interests.  A  long- 
array  of  "eminent  statesmen"  had  shufiled  into  solemn 
view,  and  for  a  while  had  been  the  cynosure  oi  the 
r.-'tion,  and  then,  like  exploded  rockets,  had  disappeared 
into  obscurity,  or  into  a  stale  akin  to  it.  Yet,  in  an- 
oilier  aspect,  brief  and  borrowed  as  was  their  power, 
llieirs  wa-  not  the  portion  of  oblivion;  conventional  his- 
tory,  which  accepts  the  apparent  as  the  real,  document^ 
nml  often  perpetuates  their  names,  ignorant  of  the  f:ici 
ihal  they  were  only  the  server^  or  servitors  of  particular 
impelling  forces  and  nitere-t--. 

244 


\.\     AT    iMS    ZKNITll  245 

Behind   the   nominal   political    masters   stood   the    real 
masters  —  the  great  magnates. 


HISTORICAL   OMISSIONS   AND    MISJUDGEMENTS. 

Seeing  that  this  is  so,  what  vitally  boots  it  whether 
this  or  that  individual  happened  to  fill  the  so-called  great 
elective  or  appointive  offices?  In  stereotyped  historical 
textbooks  and  narratives  the  names  of  J.  1'ierpont  Mor- 
gan and  his  like  do  not  enter;  not  even  a  cursory  glimpse 
is  given  of  their  deeds.  Yet,  in  large  part,  these  are  the 
significant  things  that  fundamentally  have  made  actual 
history.  Rulers  have  been  allowed  to  make  formal  dec- 
laration of  wars,  but  capitalists  have  commanded  them. 
When  it  pleases  the  interests  of  capital  to  have  peace, 
titular  rulers  are  ordered  to  arrange  it.  Should  rulers 
be  so  obtuse  or  stubborn  as  to  stand  in  the  way  of  capi- 
talist interests,  revolution  follows.  If,  in  a  parliamen- 
tary countrv  laws  are  somehow  enacted  contrary  to  the 
interests  of  the  dominant  capitalist  class,  those  laws  are 
effectively  voided.  All  of  which  proves  that,  although 
presidents,  kings  and  emperors  may  mightily  pose  as  the 
"creators  of  policies,"  yet  after  all  the}-  are  only  the 
sounding-board  creatures  of  money  forces  unnoticed  bv 
i  irthodox  histories. 

An  overbearingly  potent  and  heroic  "great  man" 
iv-Hj-evelt  appeared;  many  a  descriptive  work  has  been 
written  of  him:  and  doubtlos,  in  the  curious  nature  of 
ihings,  we  are  likewise  fated  to  see  many  a  statue  of  bird. 
For  what  ?  If  history  tells  the  tale  aright  it  will  tell  how 
be  begged  campaign  fnnd<  from  the  very  trust  magnates 
\vhom  lie  pretended  to  tlout  :  how,  in  a  critical  moment  in 
ihe  national  election  of  1904,  'u1  so  despaired  of  success 


246         .HISTORY    OF    THE    GREAT    AMERICAN    FORTUNES 

that  he  was  forced  to  appeal  to  Morgan,  Harriman  and 
their  fellow  magnates  for  a  fresh  and  immediate  infusion 
of  funds.  The  world  does  not  revere  a  loser,  unless  he 
be  a  great  one,  and  for  a  great  cause.  In  considerable 
degree,  Roosevelt  fought  the  fight  of  a  rapidly-decaying 
cau>c,  that  of  the  middle-class,  a  cause  doomed  to  fall 
ignobly,  and  rightly  so.  On  the  surface  he  seemed  the 
"  big  man  "  of  the  day  :  in  point  of  fact,  he  was  van- 
quished by  such  magnates  as  Morgan,  Harriman  and 
Rockefeller.  They,  to  all  appearances  mere  private  in- 
dividuals, defeated  every  move  of  him  who  was  supposed 
to  be  invested  with  even  greater  powers  than  many  po- 
tentates. 

The  irresistible  progress  of  the  trust  movement  and 
the  all-comprehending  power  of  the  magnates,  can  be 
better  estimated  when  it  is  recalled  that  it  was  during 
Roosevelt's  administration  that  the  most  antagonistic 
campaign  thus  far  essayed  against  the  trusts  was  carried 
on.1  At  least  it  seemed  so  if  invective  and  suits  at  law 
counted.  But,  at  basis,  Roosevelt,  despite  his  pretenses, 
was  an  instrument  of  the  trust  magnates,  which  fact  was 
connoted  anew  bv  the  circumstance  that  he  was  the  Presi- 
dent who  signed  the  act  striking  out  the  imprisonment 
clause  from  the  anti-rebating  act  assuring  magnates 
and  corporations  full  immunity  from  criminal  prosecu- 
tion.''1 

'•That  is  against  the  "had"  trusts.  How  even  the  outward 
act^  of  officialdom  were  being  made  to  conform  to  the  interests 
of  tin-  ruling  class  was  shown  by  the  growing  tendency  to  ac- 
cept sonic  trusts  as  "  good,"  and  so  arraign  others  as  "bad,''  al- 
thi'Ugh  all  trusts  subsisted  in  violation  of  statute  law. 

(  mirage,  h»nesty  and  the  saving  grace  of  common  sense,  ac- 

•  '  Mr.  Roosevelt,  are  the  ilm-e  thing>  that  will  make  nun 

real."     .     .     .     wrote   A.    Maurice    Low   in   "The   Independent," 

;u     uf    October    30,    igo.2.     While    thus    humbly    imploring    the 

ates    for    funds    with    which    to    finance   his   campaign,    and 

relieving   them   by   law    from   imprisonment,    Roosevelt   took   spe- 


MORGAN  AT  HIS  ZENITH  247 

It  was  proved  again  during  the  great  coal  strike  of 
1902  when  Roosevelt  was  forced  to  beseech  J.  Pierpont 
Morgan  to  consent  to  some  kind  of  arbitration  settlement. 
True,  indeed.  Roosevelt,  or  those  inspired  by  him.  could 
darkly  intimate  that  it  were  well  for  the  coal  magnates 
to  come  to  terms;  othenvise  ihey  might  sutler  criminal 
prosecution  for  violation  of  the  act  forbidding  railroads 
from  owning  coal  mines.  Hut  the  magnate-;,  well  realiz- 
ing how  often  they  had  luard  this  chip-trap  M>rt  of  talk, 
and  how  empty  and  futile  it  all  was,  could  pass  it  over 
with  amused  contempt.  Then  came  the  sight  of  the 
President  of  the  I  nited  States,  theoretically  representing 
85,00x5,000  of  people,  being  compelled  to  parley  and  treat 
with  a  few  magnates  on  their  own  terms.  '  The  one 
man  who  controlled  the  operators,"  wrote  A.  Maurice 
Low  (who,  unquestionably,  was  one  of  the  best  informed 
newspaper  correspondents  at  Washington),  "was  Mr.  J. 
Pierpont  Morgan.  Everything  else  having  failed  his 
services  had  to  be  enlisted."  Morgan  instantly  showed 
that  he  had  the  power  of  doing  what  the  President  of  the 
United  States  acknowledged  that  the  highest  executive 
in  the  country  in  his  own  person  could  not  do  —  a  fact 
moving  Low  to  exclaim  reverentially  (as  quoted  hereto- 
fore) :  "  (Ireat  is  Mr.  Morgan's  power,  greater  in  some 
respects  even  than  that  of  Presidents  or  Kings."  Roose- 
velt could  publicly  boast  of  his  having  settled  that  strike. 

cial  occasion  in.  1907  to  prejudice  public  opinion  against  Mover. 
Haywood  and  Fcttibone,  officers  of  the  Western  Federation  of 
Miners,  \vhen  they  were  in  prison  awaiting  trial.  Thev  were 
later  acquitted  of  ilie  trumped-up  charge  of  murder  brought  by 
pouertul  capitalist  interests  in  order  to  discredit  and  break  up 
the  pro.ure^ive  labor  organization  of  which  they  were  the  heads. 
(.\nainly,  Roosevelt  was  extremely  courag'eotis  in  attacking  the 
weak,  and  tho>e  from  whom  he  could  expect  no  support  or 
funds.  A  more  overestimated  mar,,  nor  one  who  more  -uccess 
fully  befooled  the  people  by  sheer  talk,  has  not  lived  in  recent 
iimes. 


iiiSTOUV    Ol-    THE    GXCAT    AMiiKiCAN    FUR'iV  N  KS 

yet,  in  point  of  actual  fact,  Morgan  shrewdly  used 
Roosevelt  to  bring  about  a  settlement  at  the  time  when 
the  magnates  decided  it  was  politic,  and  with  a  result  the 
most  favorable  that  they  could  hope  for  in  the  particular 
alarming  exigency.3 

Morgan's  lofty,  surmounting  status  at  this  time  did  not 
arise  from  any  misconception  that  he  was  the  richest  man 
in  the  United  States.  That  prepotency  John  D.  Rocke- 
feller could  easily  claim  and  hold.  But  Morgan  was  so 
unceasingly  before  the  public  in  some  activity  or  other, 
and  was  so  preeminently  conspicuous  in  the  organization 
of  railroad  combinations  and  industrial  trusts,  that,  con- 
sidering all  aspects,  he  was  looked  upon  as  perhaps  the 
most  important  of  the  magnates. 

This  was  a  popular  deception,  and  was  caused  by  the 
difference  in  tactics  between  Morgan  and  the  Standard 
Oil  oligarch}-.  The  Rockefellers  and  their  associates 
systematically  discouraged  publicity  as  to  their  business 
transactions ;  in  all  of  their  operations  they  cultivated 
the  profoundest  secrecy  and  took  exceeding  pains  not  to 
acquaint  the  people  with  the  real  extent  of  their  posses- 
sions, nor  with  the  methods  by  which  they  were  gradually 
drawing  into  their  owner-hip  the  resources  of  not  only 
one  nation,  but  of  many  nations.  AYorking  through  aux- 
ilarie-  or  intermediaries  the}-  were  converting  much  of 
the  United  States  with  its  assets,  including  human  labor. 


peace  or  war  hung  in  the  balance  :     To  permit  the 

i   meant  pos-ihilities  that   no  man  wanted  even  to 

h    ink'ht    mean    the    opening    of    Pandora'-    box.     It 

•     and    riol    and    bloodshed    in    the   coal    reeion. 

en    \vor-<    i>;    Xew   Y.,rk  city.     .Already  the  po  ir 

>r;ng    for    nul.    and    winter   had   not    even    lightly   la'd 

the  ritv.     It  might   nu-an  such  a  state  of  affair-  that 


MORGAN     AT     IliS    XMXiTlI  249 

into  their  private  property,  but  ^o  surreptitiously  was  this 
done  that  they  allowed  no  mention  of  their  conquests  to 
be  either  formally  or  informally  given  out.  The  Stand- 
ard Oil  headquarters  was  an  inaccessible  citadel  of  si- 
lence. 

On  the  other  hand,  Morgan  seemed  to  glory  in  the 
ostentation  of  publicity.  Even  if  he  did  not.  it  was  an 
indispensable  requisite.  In  his  threefold  capacity  of 
banker,  railroad  magnate  and  industrial  trust  organizer 
Morgan  needed  a  certain  amount  of  inspired  publicity 
for  the  specific  purposes  of  his  undertakings.  As  a 
banker  he  had  to  advertise  his  financing  of  projects  in 
order  to  dispose  of  the  stock  ;  the  more  power  he  was 
credited  with,  and  the  more  extraordinary  a  financier  he 
\vas  extolled,  the  easier  it  was  to  induce  a  multitude  of 
investors  to  put  their  money  in  enterprises  sponsored  by 
him. 


Uetween  Morgan,  the  precocious  young  money  zealot 
of  1861.  successfully  imposing  spurious  rifies  upon  the 
I  nion  army,  rind  Morgan  the  incommensurable  magnate 
of  K)O2.  lay  a  long  span  of  some  forty  years.  For  four 
decades  he  had-  incessantly  campaigned  for  great  wealth  ; 
thousands  of  Wall  street  aspirants,  ambitious  to  reach 
the  same  goal,  had  out-trained  themselves  during  that 
time  only  to  go  down  in  abject  failure.  Everywhere 
Morgan  could  see.  as  he  advanced,  the  immediate  wro:! 
upon  whose  misfortune?  much  of  hi<  fortune  was  built. 
And  what  were  the  cumulative  results  of  hi<  life  of 
money-seeking?  Of  the  pn>perlie-  he  owned  otherwise, 
there  is  no  definite  authentic  record,  but  the  extent  of 
hi-  railroad  possessions  can  be  a-certaincd.  Moodv 
wrote  that  in  1902  he  was  "  identified  ".•;•!•  "  ;~,,co  )  mi! 


250         HISTORY    Oi;    Till:    GREAT    AMKKJCAX    I/UKTL'NKS 

of  railroad.4  "  These,"  Mood}-  explained, ''  control  rights 
of  way,  coal  lands,  terminals,  competing  lines,  steamship 
connections  and  the  like.'' 

Further  attention  need  not  he  given  to  his  methods  of 
acquiring  railroads.  His  railroad  transactions,  large  as 
the}'  were,  hecame  somewhat  obscured  by  his  still  greater 
trust-forming  operations.  "  Mr.  Morgan,"  Moody  fur- 
ther wrote,  "  is  essentially  the  inspirer,  the  creator  and 
the  dominator  of  current  American  industrial  forces." 
A  sonorous  sentence,  but  quite  exaggerated.  Long  be- 
fore that  time.  John  D.  Rockefeller  had  demonstrated 
the  principle  of  the  centralization  of  industry;  Morgan 
neither  exclusively  inspired,  created  nor  dominated;  he 
was  but  one  of  the  leading  practicalists  in  transforming 
industrial  conditions  from  the  competitive  to  the  tru-t 
form.  "  lie  is  unquestionably,"  went  on  Mood}',  "  the 
boldest,  the  ablest  and  most  far-seeing  of  any  of  the 
modern  '  generals  of  finance  '  who  stand  at  the  head  of 
the  modern  movement  for  the  consolidation  idea  in  the 
production  and  distribution  of  wealth.  This  is  easily 
proven  by  the  fact  that  the  enterprises  in  which  his  in- 
fluence is  paramount  to-day  are  the  strongest  and  most 
ably  planned  of  anv  of  the  great  combinations  or 
'  tru.-t-.'  '"  •"' 

Such  eulogies  as  this  have  a  mechanical  ring:  ihev  nave 

!>een     manufactured     almost     automatically.     That    they 

:;  nd    unchallenged     ;.~     sufficient    comment    uon    the 


MORGAN    AT    HIS    ZENITH  25! 

why  he  should  be  brevetted  a  "  general  of  finance."  The 
assumption  evidently  has  been  fixed  that  these  high- 
sounding,  all-inclusive,  prejudicative  assertions  would  be 
swallowed  as  truth  ordained ;  and,  remarkable  as  it  does 
seem,  this  has  been  the  brand  of  truck  ladled  out  for 
consumption  by  the  American  people.  Fortunately  there 
prevails  in  some  quarters  a  rebellious  spirit  of  free  in- 
quiry, which  same  spirit  presses  us  to  know  more  of 
what  a  magnate  had  to  do  in  order  to  be  ranked  as  a 
"  general  of  finance.'' 


MORGAN  S    ORGANIZATION    OF    THE    STEEL    TRUST 

\Yhat  was  the  exceptionally  strong  and  ably-planned 
trust  to  which  Moody  thus  so  airily  refers?  It  was  the 
great  Steel  Trust.  Xeed  it  be  remarked  that  this  was  by 
no  means  Morgan's  only  such  progeny?  In  the  organi- 
zation of  so  many  trusts  did  he  participate  that  the  term 
"  Morganization  of  Industry  ''  ran  rampant  like  an  ob- 
session. \Yith  these  other  trusts,  however,  it  is  hardly 
necessary  to  deal ;  as  a  crystalline  example  of  Morgan's 
methods,  the  Steel  Trust  will  doubtless  suffice. 

This  trust,  let  it  be  proclaimed  at  the  outset,  was  no 
paltry  affair  of  a  few  hundred  million  dollars.  It  was 
an  enterprise  worthy  of  the  application  of  a  "  great 
general  of  finance."  The  pen  may  stumble  in  writing  it. 
but  somehow  we  will  contrive  to  get  the  fact  into  print 
that  this  trust  came  into  being  with  more  than  a  billion 
dollars  capital.  .And  we  feel  irresistibly  constrained  to 
linger  upon  that  billion  dollars.  flic  ordinary  human 
mind  !-•  capable  of  much  :  it  can  let  it>  exuberant  imagina- 
tion create  heavens  and  helN,  enchantments  and  exor 
cUnis,  and  it  can  ^trctch  illusion  to  realms  without  limit: 
but  to  conceive  of  a  billion  dollars,  or  rather  to  visualize 


252         HISTORY    01-'    THE    C.RLAT    AMERICAN    FORTUNES 

it,  is  a  task  to  be  forsworn.  Quite  idle  is  it  for  the 
\vorkers  to  attempt  the  visualization ;  their  sole  part  is  to 
produce  the  billions,  not  to  see  them,  much  less  have 
the  use  of  them.  Contemplating  that  billion  dollars 
further,  we  are  driven  to  note  the  immense  progressions 
occurring  in  the  case  of  a  "  great  general  of  finance. 
As  a  downy  young  man,  Morgan  was  probably  content 
with  his  profits  of  thousands  in  financing  the  selling 
of  that  batch  of  condemned  rifles  to  the  army  ;  but  then 
he  was  only  a  mere  ambitious  fledgling.  Yet  now. 
namely,  in  the  year  1901.  when  he  organized  the  Steel 
Tru.-t,  he  had  become  a  full-fledged  "  general."  and,  as 
all  men  know,  no  "  general  of  finance  "  in  these  days 
i-  worthy  of  the  name  unless  he  splashes  in  projects  of 
the  major  hundreds  of  millions,  or  billions  of  dollars. 

In  this  Steel  Trust  (or  Lnitcd  States  Steel  Corpora- 
tion, as  it  chose  to  call  itself)  a  very  large  number  of 
important  plants  were  gradually  merged  :  plants  in  main 
parts  of  the  l/nited  States,  iron  plants  and  steel  mills 
and  factories  of  tin  products  —  every  kind  and  quality 
of  wares  made  [rum  iron  and  steel  were  embraced  in 
the  production  of  the  plants  gathered  in  under  this  gi- 
gantic corporation.  It  was  pleased  to  style  itself  not  an 
owning  corporation  so  much  as  a  "holding  company." 
All  of  the  existing  plants  in  the  United  State-  it  did 
nut  succeed  in  taking  within  its  fold,  but  of  thor-e  re 
maining  outside,  many  were  large  mills  allied  with  it, 
doubtless  to  give  a  judicious  appearance  of  competition. 
'  ithcrs  there  were  of  an  "independent"  order,  mills 
tic  to  the  trust  and  actively  bent  upon  o  :. 
;  ••  i  iig  with  it.  !"( >r  rea-on-  to  be  stated  laUr  In  t'ii- 
ehapter  the  Steel  Trust  had  no  fea1'  of  most  of  {}<  •  . 
There  w;  -  another  black  prospect  for  the  midrilc-cia--. 
Verilv,  the  once  infallible  doctrine  that  "competition  i.- 


the  life  of  track',"  was  side  unto  death,  and  college  pro 
fessors   were   utterly  at  a  loss  to  know  how  to  inter  the 
corpse  decent! v,  when  decease  finally  came. 

i'erhaps  curiosity  may  he  expressed  regarding  the 
prior  history  of  these  individual  steel  and  iron  and  tin 
plants;  how  they  became  huge,  and  their  owners  multi- 
millionaires, before  the  Steel  Trust  was  organized.  Were 
their  owners  honest  men  who  thriftily  saved  their  pen- 
nies, amassed  capital,  toiled  hard,  invented  their  own 
devices,  and  were  respectable  men  and  legitimate 
traders? 

Not  quite.  They  were  accounted  respectable  enough, 
but  their  methods  were  not  a  scintilla  different  from 
those  of  the  capitalists  in  all  other  fields,  which  is  to  say 
that  their  respectability  was  as  well  founded  as  that  of 
any  other  capitalist  group.  Yet  this  is  not  the  appro- 
priate place  to  give  a  detailed  account  of  their  careers  — 
how  they  and  their  predecessors  thrived  on  inventions 
many  of  which  they  got  by  chicanery  or  theft ;  how  they 
again  and  again  and  again  bribed  Congress  for  a  high 
protective  tariff;  how  they  corrupted  elections  and  ruled 
cities  and  partially  State  and  National  Governments : 
how  they  defrauded  the  Government  before,  during  and 
after  the  Civil  War;  how  the  armor  mill  owners  charged 
their  own  Government  extortionate  prices  for  warship 
armor  plate  which,  on  at  least  one  specific  occasion,  was 
found  to  be  worthlessly  defective'1';  and  oppressed  their 

0  Thi>  was  in  1804.  According  to  official  reports  the  Carnegie 
Steel  Company  \vus  making  armor  plate  at  a  co>t  of  le>s  thai) 
SJCKI  a  ton,  which  plate  i-  M>M  t"  the  Russian  go\  eminent  a1 
bL'4v,i  a  ton  while  charging  the  'Cr.ited  States  Government  from 
$5 jo  to  $700  a  ton  for  precisely  the  same  armor  plate.  Afur 
an  elaborate  investigation,  a  Congressional  Committee  reported 
(see  House  Report  Xo.  14^18,  Fifty-third  Congress,  Second  Ses- 
sion 1  : 

"The  company  was  hired  to  make  the  best  possible  armor 
plate,  and  \va<  paid  an  enormous  price.  Resting  under  the.-e 


2^4         HISTORY    OF    Till'.    GREAT    AMERICAN    FORTUNES 

masses  of  workers  and  when  those  workers  struck  for 
better  conditions  caused  them  to  be  shot  down,  as  hap- 
pened in  the  Carnegie  works  at  Homestead,  Pennsyl- 
vania, in  1892.  All  of  these  factors  and  conditions  will 
be  fully  described  in  a  subsequent  part  of  this  work.7 

ROCKEFELLER    AND    CARNEGIE    FALL    OUT. 

Not  with  a  rythmic  placidity  did  the  Steel  Trust  come 
into  being.  An  embittered  contest,  tinged  with  much 
personal  animus,  among  certain  of  the  great  magnates 
preceded,  and  in  some  degree  precipitated,  its  forma- 
tion. 

Controlling  a  large  part  of  the  iron  ore  deposits  in 
the  Mesaba  region  in  the  Northwest,  Rockefeller  had 
been  aiming  to  buy  out  the  Carnegie  plants  for  the  pur- 
pose of  organizing  a  trttst.  To  compel  Carnegie  to 
yield,  he  had  recourse  to  the  methods  he  had  so  often 
and  successfully  used  in  the  oil  fields.  But  he  found 
Carnegie  a  hornet  of  an  individual.  It  did  Rockefeller 
no  good  to  mass  his  interests  in  the  ore  fields,  in  Lake 
Superior  transportation  atid  in  railroads  against  Car- 
obligations  the  company  or  its  servants  perpetrated  manifold 
frauds,  the  natural  tendency  of  which  was  to  palm  off  upon  the 
(iovcrnmcnt  an  inferior  armor  whose  inferiority  might  per- 
chance appear  only  in  the  shock  of  battle  and  with  incalculable 
damage  to  the  country. 

"  The  efforts  of  the  company,  and  of  its  superintendents, 
("line,  Corey  and  Schwab,  have  been  to  satisfy  your  committee 
ilia!  the  armor  is  tip  to  the  requirements  of  the  contract,  not- 
withstanding the  false  reports  to  inspectors,  doctoring  of  speci- 
men:-, plugging  of  plates,  fraudulent  retreating  of  test  plate-; 
;'ud  'jockeying'  of  the  testing-machine  The  unblushing  char- 
acter i  if  the  fraud-;  to  which  these  men  have  been  parties  and 
the  disregard  for  truth  and  honesty  which  they  have  shown  in 
testi  lying  before  your  committee  rentier  them  unworthy  of  cre- 
dence." 

7  "  The   (ireat    Fortunes   From  Industries." 


M  Ol<r.  AN    AT    JIIS    /.I'.XITH  255 

negie  interests.  Fvery  move  was  checkmated  by  Car- 
negie; Rockefeller  was  finally  compelled  to  lower  his 
rates  on  iron  ore.  Finding  that  he  could  not  crush  out 
Carnegie  as  he  had  crushed  small  oil  producers,  Rocke- 
feller changed  his  tactics.  He  advanced  Henry  C. 
Frick  a  million  dollars  as  payment  to  Carnegie  for  an 
option  to  buy  the  Carnegie  plants  for  $100,000,000. 
Frick  had  been  a  partner  of  Carnegie,  but  between  the 
two  differences  had  arisen  developing  into  a  festering 
antagonism. 

If  Rockefeller  assumed  that  his  plan  would  go  through 
without  obstacles,  he  found  himself  enlightened  before 
long. 

The  first  hindrance  was  the  unfavorable  times.  As- 
suredly, the  great  monarch  of  wealth  did  not  intend  to 
pay  that  $100,000,000  out  of  his  own  personal  resources. 
Such  a  plan,  according  to  approved  methods  of  finance, 
would  be  asinine.  The  gudgeons  were  to  pav  for  it  ; 
the  people  who  could  be  depended  upon  to  buy  slock 
issues,  which  stock  could  be  manipulated  so  that  the 
losses  of  those  investors  would  be  equal,  and,  much 
more,  to  the  capital  required.  But,  at  that  juncture, 
it  was  reckoned  thai  the  anticipated  victims  were  in  no 
mood  or  shape  to  exchange  cash  for  engraved  paper. 
A  propitious  occa>ion  had  to  be  awaited. 

The  delay  was  costly  to  Rockefeller.  The  option  held 
by  Frick  expired  by  time  limit.  And  that  precious  mil- 
lion dollars  advanced  by  Rockefeller  —  what  became  of 
that?  Carnegie  declared  it  forfeited,  and  held  on  to  it. 
Frick  was  enraged,  and  Rockefeller  resentful.  Hence- 
forth, the  animosity  between  Frick  and  Carnegie 
deepened,  while  Rockefeller  contained  him-elf  till  the 
dav  when  he  would  even  matters  with  Carnegie. 


256 


I-YickV    and    Rockefeller's    carefully    nursed    ambitions. 
Hi  is  factor  was  J.  I'ierpont  Morgan. 

The  bridge  and  the  tube  trusts,  owned  largely  by 
Morgan,8  had  been  planning  to  manufacture  their  own 
billets.  As  the  Carnegie  works  were  flourishing  in  the 
billet  trade,  the  news  was  of  momentous  importance  to 
Carnegie.  Tie  at  once  prepared  to  retaliate.  But  how 
could  he  effectively  do  >o  ?  \Yhat  form  of  reprisal  would 
be  quickest  and  most  telling?  Carnegie  had  grown 
seared  with  experience  Sa  in  the  machinations  of  trade; 
he  was  not  the  magnate  to  be  taught  how  to  strike  at  a 
competitor's  most  vital  point.  The  word  flew  forth  that 
he  intended  to  go  into  the  bridge  and  tube  business. 
Here  was  an  announcement  for  Morgan  to  ponder  and 
scowl  over.  I.'ut  another  edict  (it  is  no  exaggeration  to 
speak  of  the  orders  issued  by  magnates  as  edicts)  fol- 
lowed in  rapid  order.  Carnegie  knew,  of  course,  that 
Morgan  was  an  extensive  owner  of  the  Pennsylvania 
Railroad  and  its  properties.  If  a  railroad  were  built  to 

8  Indications  of  the  methods  of  the  companies  in  the  bridge 
trust  came  out  in  1910,  and  cau-cd  a  considerable  public  scandal. 
State  Senator  Confer,  and  other  witnesses  testified  before  the 
Xe\v  York  State  Senate,  sitting  as  a  trial  Committee  of  the 
Whole,  that  a  corruption  fund  of  $6.000  had  been  distributed, 
in  looi,  among  three  influential  members  of  the  Assembly,  to 
bring  about  the  defeat  of  a  bill  considered  disadvantageous  to 
the  interests  of  the  bridge  trust.  J.  P.  Allds.  President  pro  tern 
<>f  the  Senate,  at  the  time  the  charges  were  made,  was  one  of  the 
licensed.  'I  'ne  Senate  found  him  guilty.  The  revelations  before 
this  committee  in  February  and  March,  1910,  were  of  such  a 
character  that  it  was  the  general  opinion  that  they  only  faintly 
indicated  the  vast  and  continuous  corrupting  of  legi.-lature>  by 
rations  of  all  kinds.  This  belief  was  borne  out  by  the  fact 
that  resolutions  introduced  in  both  houses  of  the  Legislature  for 
a  comprehensive  self-investigation  were  at  iir>t  voted  down. 

"•'- "  Seared  with  experience.''  IraMiirch  a?  a  description  of  hi< 
career  i-  not  strictly  relevant  to  this  part  of  the  work,  we  can- 
rot  halt  here  to  recount  the  details,  of  transactions,  in  which, 
many  a  time,  lie  had  got  the  better  of  panner-.  friend-,  invent- 
or^ and  competitors. 


MORGAN    AT    HJs    Xl-N'lTll  2$/' 

compete  with  the  .Pennsylvania  system,  Morgan's  in- 
terests and  fortune  would  be  doubly  assaulted.  Car- 
negie allowed  the  information  to  get  out  that  he  pur- 
posed to  construct  his  own  railroads  from  Pittsburg  to 
the  Great  Lakes,  on  the  west,  and,  on  the  east,  to  the 
Atlantic  Ocean.  He  went  on  with  the  plan  as  though 
he  were  in  dead  earnest :  he  rushed  surveying  parties  to 
map  out  the  route. 


THE    RESULTS    OF    CARNEGIE  S    RETALIATION. 

The  effect  upon  Morgan  was  galvanic.  Perhaps 
Carnegie  was  bluffing  in  return  for  bluffs.  But  the  situ- 
ation was  too  serious  for  trilling.  Carnegie  might  carry 
out  his  threats;  there  was  the  danger.  Had  Morgan 
been  dealing  with  the  United  States  Government  he 
would  have  felt  no  great  concern  at  threats  that  he  knew 
he  could  safely  ignore;  but  in  contesting  with  Carnegie, 
he  was  opposed  by  a  magnate  of  whose  power  lie  had 
reason  to  be  grimly  apprehensive.  How  could  Carnegie 
be  placated,  or  dissuaded,  or  prevented  from  carrying 
out  hi>  ominous  plan-?  (  >ne  heroic  way  there  was  — 
to  bnv  him  out.  and  organize  a  trust. 

Thereupon,  it  i-  related,  Morgan  betook  himself  po-t 
ha^te  to  Carnegie,  X<>  time  was  lost  in  unesscntials. 
The  magnates  went  straight  to  tin-  point.  Morgan  in- 
miired  of  Carnegie  for  what  sum  he  would  sell  hi-  plants. 
\Vith  a  clever  expression  <>f  indifference.  Carnegie  sen- 
tenliously  replied,  "  Three  hundred  million-;."  A  silence 
ensued:  the  magnate-  looked  craftilv  at  each  other. 
Whether  Morgan  was  aware  that  <>n!v  a  short  time  pre- 
viotisly  Carnegie  had  agreed  to  sell  out  to  Friek  for 
$100.000,000  i-  not  known.  Hn  his  part,  Carnegie  be- 
lieved that  he  had  Morgan  in  a  corner,  which  convic- 


258         HISTORY    OK    THK    ORKAT    AMERICAN    KORTUXKS 

t:on  was  clearly  worth  a  raise  of  $200,000,000.  Perhaps 
Carnegie,  in  the  style  of  the  excellent  business  man, 
asked  an  exorbitant  price  so  as  to  compromise  on  a  sum 
larger  than  he  really  expected.  Morgan's  next  words 
must  have  surprised  him.  There  was  no  drawn-out 
haggling,  no  comment  of  any  character.  "  Take  it  in 
mortgage?"  asked  Morgan  brusquely.  "Provided  it 
covers  the  whole  proposed  combination."  Carnegie  re- 
plied. The  trade  was  then  and  there  arranged ;  the  re- 
mainder was  simply  a  matter  of  formalities  and  ratifica- 
tions. 

Carnegie  was  pleased  with  himself.  Two  great  ob- 
jects he  had  accomplished:  he  had  obtained  an  immense 
purchase  price,  far  beyond  his  expectations,  and  he  was 
now  able  to  carry  out  a  yearning  that  he  had  long  in- 
dulged of  divesting  himself  of  active  business  cares, 
and  of  playing  the  exclusive  role  of  the  retired 
and  philanthropic  captain  of  industry.  Doubtless,  lie 
felt  quite  positive  that  he  had  outwitted  even  the  great 
J.  Pierpont  Morgan. 

But,  as  time  passed,  he  found  good  grounds  to  have 
doubts  of  his  astuteness. 

Subsequently,  after  .Morgan  had  demonstrated  how 
vast  sums  could  be  taken  in  with  facility  in  jobbery  in 
the  stock  issues  of  the  Steel  Trust,  Carnegie  began  to 
look  back  and  perceive  that  he,  not  Morgan,  was  the 
outdone  one  —  not  a  pleasant  feeling  for  a  man  who 
had  been  self-satisfied  that  he  was  as  sharp  as  any  of 
the  other  magnate--,  \\liile  Carnegie  was  ostentatiously 
dispensing  millions  for  public  libraries,  and  preaching 
the  doctrine  that  it  wa>  a  disgrace  to  die  rich,  he  wa> 
•^ecretly  fuming  over  the  fact  that  he  had  not  held  up 
Morgan  for  a  hundred  million  dollars  more.  This  story 
was  current  in  Wall  street: 


MORGAN    AT    1 1  IS    XKNITH  250 

Many  months  later  Carnegie  and  Morgan  were  on  the  same 
Atlantic  liner  bound  for  recreation  in  foreign  fields.  Coming 
down  late  to  their  morning  coffee,  there  was  a  few  minutes  for 
reminiscence  between  them. 

"  Do  you  know,  Air.  Morgan,"  said  Carnegie,  "  I  have  been 
thinking  it  over,  and  I  find  I  made  a  mistake.  I  should  ha\v 
asked  you  another  hundred  million  for  those  Carnegie  proper- 
ties." 

"  If  you  had,  I  should  have  paid  it/'  responded  Morgan  in 
his  frank,  unfeeling  truthfulness. 

And  Carnegie,  so  the  story  goes,  was  so  soured  in  his  soul 
that  he  could  take  no  more  toast  and  marmalade. '•' 

As  in  the  case  of  the  railroads,  and  of  other  indus- 
trial concerns,  the  characteristics  so  typical  of  altered 
economic  conditions  were  seen  in  the  passing  of  the  steel 
industry  into  the  control  of  Morgan,  Rockefeller,  the 
(joulds  and  their  fellow  magnates. 

Carnegie  had  grown  up  in  the  steel  business  ;  he  knew 
its  details  and  technique  with  consummate  thoroughness. 
fn  addition,  he  had  adopted  the  plan  of  making  partners, 
in  a  measure,  of  subordinates  who  had  proved  their  ca- 
pacity in  both  the  knowledge  of  the  manufacture  of  steel 
and  in  methods  calculated  to  increase  profits.  Neither 
Morgan  nor  Rockefeller  nor  ( iould  had  any  technical 
knowledge  of  how  to  run  a  steel  plant  :  left  to  them- 
selves they  could  not  have  managed  a  factory  for  a 
single  minute.  But,  as  the  capitalist  system  went,  thev 
were  not  required  to  have  the  slightest  training  in  run- 
ning railroads,  factories,  steamships  or  mines.  They 
could  annex,  or  engage,  men  of  experience  to  do  this 
for  them. 

How  were  the  great  steel  plants  to  be  directed,  now 
that  the  industry  had  gone  out  of  the  hands  of  owners 
who  personally  had  known  how  to  do  that  directing?1 

9  ''  The  Wall  Street  Journal."  issue  of  August  2,   IQOQ. 


260        HISTORY    OF    THK    GREAT    AMERICAN    FORTUNES 

The  problem  was  very  simple,  or  rather,  it  was  no 
problem  at  all.  Morgan  followed  Carnegie's  plan  of  put- 
ling  skilled  men  at  the  directing  head,  and  of  allowing 
them  to  share  somewhat  in  the  division  of  stock  and 
profits.  Highly  significant  of  the  methods  of  capitalists 
was  their  selection  of  directing  managers.  \Ye  have 
seen  how,  when  Schwab  and  Core}-  were  superintendents 
of  the  Carnegie  plants,  a  Congressional  committee,  in 
1894.  had  denounced  them  individually,  in  a  tame 
enough  report,  as  being  specifically  responsible  for  the 
armor-plate  frauds.  Did  Carnegie  discontinue  their 
services?  At  that  very  time  Carnegie  was  thrusting 
himself  forward  publicly  as  a  pious  benefactor  and 
a  loftv  citizen.  Did  he  .-how  anv  indignation  at 

*  o 

Schwab's  and  Corey's  method-:  How  could  he?  Had 
they  not  thereby  shown  what  valuable  profit  producers 
the}'  were?  lie  prized  their  services  so  much  that  he 
not  only  bestowed  continuous  marks  of  favor  upon  them, 
but  he  later  elevated  them  to  be  directors  and  minor 
partners. 

They  were  identically  the  men  whom  Morgan  also 
wanted:  from  a  capitalist  point  of  view  they  were  highly 
efficient.  \Yhen  Morgan  organized  the  Steel  Trust,  to 
whom  did  he  turn  a^  hi-  -election  for  executives?  To 
Schwab  and  Corey  :  they  successively  occupied  the  po- 
-ition  of  president  of  the  I  nited  States  Steel  Corpora- 
tion. Indeed.  Schwab  expanded  to  IDC  somewhat  of  a 
magnate  him-elf.  and  incontrovertiblv  proved  that  he 
had  learned  proficiency  in  genuine  magnate  methods. 
1  'rganizing  the  I  nited  States  Shipbuilding  Company,  on 
!;:-  own  hook,  he  and  his  associates  issued  false  pros- 
pectuses, decoyed  investor-,  fraudulently  made  a  gift  to 
themselves  of  $55,000.000  in  securities,  and  otherwise 
committed  r-uch  fraud  upon  fraud,  that  after  the  com- 


MORGAN    AT    HIS    ZENITH  26l 

puny  had  gone  into  bankruptcy  the  receiver  denounced 
the   whole  transaction  as  "  an  artistic  swindle."  10 


A  TRUST  PERFECT  IX  AEE  PARTS. 

Apart  from  the  recital  of  these  frauds,  there  can  be 
no  gainsaying  of  the  fact  that  the  Steel  Trust  was  the 
very  acme  of  efficient  organization  for  capitalist  pur- 
poses. Other  trusts  might  be  well  organized  in  the  field 
of  production,  and  partially  that  of  distribution,  and 
yet  lack  control  of  the  supply  of  raw  material.  The 
Steel  Trust  controlled  all  three  of  these  factors.  It 
had  its  own  plants.  With  Morgan,  the  Standard  Oil 
magnates  and  the  Goulds  either  dominating,  or  asso- 
ciated with,  it,  the  railroad  and  steamship  lines  of  the 
United  States  were  at  its  disposal.  It  owned  vast  de- 
posits of  iron  ore  and  coal,  some  of  which  had  been 
turned  over  to  it  by  Carnegie,  and  others  of  which  John 
I).  Rockefeller  held.  The  Steel  Trust,  in  fact,  was  the 
fir-t  trust  to  establi-h  a  scientific  control  over  tlie-e 

10  See  report  of  ex-United  States  Senator  James  M.  Smith, 
receiver  of  the  company,  to  the  United  State-  Di-trict  Court 
Newark.  X.  J.  I  he  report  \\  a-  submitted  to  the  court  on  Xo- 
vember  2,  loo.?.  The  appended  paragraph  is  only  a  slight  portion 
o f  the  entire  report  : 

"\\lio  participated   in   tin-   wholesale   plunder?     The   te-tinionv 
now    being   taken     .     .     .     will    doubtless    di-clo-e    the    names    oi 
all    the    participant.-:    but    as    -ucli    testimony    \\-ili    be    submitted 
to   this  court   for  action,  your   receiver  doe-   not   deem   it   proper 
to  comment    upon   it    here.     Certain    it    is   that    much   of   this   va-; 
amount     of    .-lock    and    bond-    wa-    taken    by    persons    and    cor 
poration-  who  parted  witli  little  or  no  considerations  in  exchange 
therefor.      Block-   of   the   stock    \veni    to  the   vendors  of   the  con- 
stituent   plant-   and   to  the   purchasers   of   bonds,   as   bonus,  ahso 
lutelv    without    benefit    to   the    company;    $JO,ooo,OOO  of    it   admit 
ledly   went   to   Mr.   Charle-   M .   Scliv.ah  in  addition   to  the  agreed 
price    for    Bethlehem.      Some  oi    ;t    went    to   the   promoter-   of   tin- 


2O2         illblOKY    UI;    THE    GREAT    AMERICAN     lOK'il.XLS 

three  factors.  so  indispensable  to  the  perfect  operation 
of  a  tru.-t.  By  its  ownership  of  great  iron  deposits,  and 
its  practical  dictatorship  over  transportation  systems,  it 
at  once  reduced  nearly  all  of  such  competitors  as  it  had 
to  nonenities.  Only  one  competitor,  the  Tennessee  Coal 
and  Iron  Company,  owned  its  own  raw  supply;  and  this 
competitor  was  later  put  out  of  the  way  under  circum- 
stances which  will  be  described  further  on. 

And  here,  again,  enters  the  familiar  factor  of  the 
small  frauds  being-  ousted  by  the  great ;  of  the  property 
originally  wrested  by  fraud  being  taken  over  by  great 
magnates  whose  specialty  (and  it  was  a  very  service- 
able specialty )  was  the  extermination  of  lesser  frauds. 
The  original  seizure  of  the  mineral  lands,  particularly 
the  iron  ore  mines  in  the  Northwest,  had  been  accom- 
plished by  force  anil  by  grossest  frauds.11 

It  \vas  because  it  controlled  all  of  the  sources  of  pro- 
duction and  distribution  that  the  Steel  Trust  was  able 
to  capitalize  itself  for  more  than  a  billion  dollars.  What 
became  of  this  billion  dollars  of  stock?  A  huge  amount 
in  common  stock"  —  no  one  knows  just  ho\v  much  — 
Morgan  awarded  to  himself  as  a  reward  for  promoting 
the  tru>t.  and  other  quantities  of  the  stock  were  issued  to 
his  associates.  At  the  same  time,  Morgan  bought  large 
quantities  of  preferred  ,-tock.  A  careful  appraisement 
by  expert-  established  the  fact  that  only  about  8300.- 
OOO  —  the  exact  price  paid  to  Carnegie  —  repre- 
sented the  actual  assets  of  the  trust;  the  remainder  of 
the  stock"  was  "  watered.''  Some  of  this  very  stock  was 
shrewdly  sold  to  a  portion  of  the  workers  in  the  steel 
is,  thus  tending  to  de-troy  their  resistance  to  the 


MORGAN    AT    HIS    ZKN1T1I  263 


FORTY     MILLIONS     STOCK     PRO  FITS     \VITUIX     A     YEAR. 

The  profits  made  by  Morgan  were  instantaneous  and 
gigantic.  The  stock  obtained  by  him  he  was  able  to 
sell  at  the  market  price  of  about  50.  By  October,  1902, 
Morgan  and  his  immediate  partners  in  the  syndicate  had 
already  distributed  840.000,000  in  profits.1-  From 
whom  did  the>e  stockjobbing  profits  come?  From  a 
host  of  middle  class  investors  throughout  the  world. 
Lured  on  by  the  glowing  prospectuses  of  the  Steel  Trust, 
and  certain  that  the  money  that  they  put  in  would  pro- 
duce large  dividends,  and  the  stock  would  rise  in  value, 
they  literally  scrambled  to  pay  over  their  money  for  the 
stock.  After  the  process  had  been  exhaustively  worked 
by  the  manipulators,  the  price  of  common  stock  was 
gradually  beat  down,  until,  in  1004.  it  sank  to  8-^4. 
Hordes  of  middle  ela.-s  investors  were  ruined;  tin1  mag- 
nates had  transferred  their  money  to  their  own  pockets. 
This  kind  of  operation  has  been  repeated  several  times 
with  great  success.  When  the  little  fellows  parted  with 
their  stocks  at  low  prices,  the  magnate1.-  would  buy  it 
hack,  and  then  by  forcing  declaration  of  dividends,  and 
making  roseate  reports  of  the  -tee!  business,  would  force 
up  the  market  quotations,  and  -ell  the  stock  back  again, 
with  resulting  immense  profits.  l',v  -uch  methods  Mor- 
gan and  hi-  associated  clique  have  taken  in  hundred:-  of 
million^  of  dollars. 

Tf  it  be  asked  from  whom  the-e  hundred-  of  milliou- 
in  stockjobbing  profit-  directly  came,  the  answer  is  sim- 
ple. Prom  the  v  •  !'  to-do,  not  merely  in  the  I  nited 


264 

Stales,  but  the  world  over.  The  involuntary  donors 
comprised  the  f;.:reign  aristocracy  as  well  as  the  American 
tradesmen,  the  .-::::dl  manufacturers  and  the  professional 


moneyed  divisions,  revealed  themselves  fully  as  eager 
as  the  native  investors  to  relieve  Morgan  of  his  vast  en- 
cumbrance of  paper  supply,  otherwise  called  stock. 
They  poured  in  their  money,  and  he  distributed  his  pa- 
per :  he  was  swamped  with  orders. 

Was  ever  such  naive  and  trusting  confidence  shown 
as  was  displayed  by  these  hosts  of  investors?  Their 
simple  faith  in  the  excellencies  of  the  magnates  could 
not  be  shaken.  Repeatedly  had  they,  or  other  multi- 
tudes of  individuals  in  their  own  classes,  been  inveigled 
into  Wall  street,  and  dexterously  cheated.  But  these 
frequent  experiences,  instead  of  implanting  a  wisdom 
tempered  by  enduring  suspicion,  passed  over  them  with- 
out leaving  a  trace.  The  merchants  and  petty  manu- 
facturers, in  particular,  who  prided  themselves  on  being 
so  adroit  in  defrauding  the  working  class,  responded 
every  time  to  the  insinuating  song  of  the  magnates. 
And  every  time  they  did  so  they  found  themselves  rav- 
ished of  their  money.  Xo  word  must  be  uttered  against 
their  methods  of  swindling  the  workers  from  whom 
came  the  wealth  seized  from  them;  such  protests  were 
dangerous  agitation.  Let  them,  however,  be  defrauded 
by  the  Wall  street  magnates,  and  curses  were  not  se- 
vere enough.  I>ut  back  the  shorn  would  flock  to  Wall 
street,  like  a  dog  returning  to  the  master  who  scourges 
it. 

Another  phenomenon  mu-t  be  significantly  noticed. 
Kven  if  considerable  sections  of  this  middle  class  warilv 
kepi  away  from  -lock  markei  adventuring,  their  money 
was  nevertheless  used  by  the  magnates,  as  though  ii 


MOKGAX    AT    1I1S    ZENITH  2O5 

were  the  assured  properly  of  those  magnates.  Astonish- 
ingly paradoxical  as  this  seems,  it  was  and  is,  a  bitter 
joke  on  the  purblind  middle  class.  The  profits  made  by 
the  small  manufacturers  and  the  retailers  in  swindling 
the  workers  by  selling  adulterated,  inferior  and  short- 
weight  products,  were  deposited  in  the  banks.  These 
deposits  were  utilized  by  the  trust  organizers  to  oblit- 
erate the  very  class  owning  them  —  a  class  hating  the 
trusts  with  a  deadly  enmity.  Such  was  the  incongru- 
ous situation  to  which  the  middle  class  was  oblivious. 
The  great  magnates  controlled  vastly  powerful  New 
York  banks;13  these  institutions,  in  turn,  held  control 
over  hundreds,  if  not  thousands,  of  smaller  banks 
throughout  the  country.  The  stock  issues  of  the  Steel 
Trust,  as  well  as  those  of  many  other  trusts,  were  sold 
to  these  banks.  The  trust  magnates  lifted  out  the  money 
of  the  middle  class,  and  the  banks,  in  exchange,  received 
the  watered  stock  and  bonds. 

T1IK    GKKAT    [XSTRAXCF,    FRAfDS. 

Hundreds  of  millions  of  dollars  more  were  held  bv 
the  great  insurance  companies  as  deposits  and  surplus 
from  premiums  paid  in  yearly  by  immense  numbers  of 
policyholclers,  comprising  the  ultra-rich,  the  middle  class 
and  the  working  class.  In  insurance  companies,  such 

13  The  three  great  New  York  banks  which,  it  is  understood, 
Morgan  then  lon^  controlled,  were  the  First  National,  the  Na- 
tional Hank  of  Commerce  and  the  Hanover  National.  Their 
immense  resources  may  be  realized  from  the<e  facts:  The  First 
National  has  a  capital  of  $10,000,000.  deposits  of  Sli.^ooo.ooo,  and 
a  surplus  of  $iS.6oo.ooo.  The  National  Hank  of  Commerce  has  a 
capital  of  $_'5. 000,000.  deposit-  of  $170.000,000,  and  a  -urplus  of 
$15,000,000.  The  Hanover  National  ha-  a  capital  of  $;vooo.oo  . 
tli  posits  of  ?S'j.ooo,  'f  •. i,  an  '  a  nrpiu.-  ni  Sm.ooo.eoo.  Since  then, 
as  we  shall  sei1.  Monran  ii::-  extended  his  control  over  a  va.-t 
number  of  oth  r  banks,  virl  ly  forming  a  Money  Trust. 


266        HISTORY    OI<"    THE    GREAT    AMERICAN    FORTUNES 

as  the  Xe\v  York,  the  Equitable  and  the  .Mutual,  the 
working  class  was  little  represented ;  the  workingmen 
could  not:  afford  to  pay  the  large  premiums  demanded. 
Forced  to  take  out  policies,  on  a  weekly  installment 
payment,  in  the  industrial  insurance  companies,  they 
were  swindled  to  an  even  greater  extent  than  were  the 
policyholders  of  the  "  old-line "  companies.  Their 
money,  too,  was  used  in  providing  trusts  with  adequate 
enough  funds  with  which  to  bribe  legislatures  for  fran- 
chises and  other  laws,  and  to  obtain  extensive  equip- 
ment. The  Public  Service  Corporation,  which,  for 
example,  owns  the  public  utility  plants  and  systems  (ex- 
cept the  railroads  )  of  the  entire  State  of  Xew  Jersey, 
was  financed  with  the  money  advanced  by  one  of  these 
large  industrial  insurance  corporations. 

Viewing  the  matter  rationally,  however,  it  will  be  at 
once  seen  that  whatever  the  enormous  accompanying 
frauds,  the  necessities  of  industrial  and  social  progress 
demanded  two  interrelated  lines  of  action.  The  first 
was  the  superseding  of  the  competitive,  by  the  trust,  sys- 
tem. Since  trusts  were  the  next  inevitable  stage,  the 
immense  funds  needed  for  their  organization  and  elab- 
oration had  to  come  from  somewhere.  Individually,  the 
magnates  lacked  sufficient  ca-h.  Consequently,  they 
were  forced  to  take  it  wherever  the}'  could  find  it,  irre- 
spective of  the  nature  of  the  methods  used. 

In  the  wielding  of  the  colossal  funds  of  the  Xew  York 
Life  Insurance  Company,  Morgan  was  a  chief  among 
the  ruling  factors,  while  also  screened  behind  figure- 
heads,  he  was  active  in  the  affairs  of  the  Equitable  Life 
A-surance  Society.14  Evidences  of  his  power,  exercised 


MOUGAX    AT    iilo    ZhlMTH  26/ 

through  indirection,  were  repeatedly  brought  out  in  the 
remarkable,  although  fundamentally  futile  investigation, 
made  by  a  Xew  York  legislative  committee  in  1905.  The 
insurance  companies  had  a  satiety  of  cash ;  Morgan, 
Harriman  and  other  magnates  had  the  stock  issues.  In- 
asmuch as  obviously  that  stock  was  not  issued  for 
aesthetic  exhibitions,  the  important  and  immediate  con- 
sideration was  to  convert  it  into  revenue.  By  collusion 
with  the  official.^  of  the  insurance  companies,  huge  quan- 
tities of  bonds  and  stocks  were  sold  to  the  insurance 
companies.1'"'  Largely  with  this  middle  class  money,  the 
magnates  were  enabled  to  finance  their  great  railroad 
and  trust  projects.  Other  portions  of  the  stock  issues 
were  sold  directly  to  the  middle  class,  and  were  then 
manipulated  so  as  to  grind  out  that  class  still  further. 


For  a  long  time  this  looting  of  the  insurance  com- 
panies went  on  unhindered,  and  without  attracting  public 
notice.  The  causes  of  this  immunity  from  official  action 
and  exposure  were  not  revealed  until  K)O5.  In  that 
year  the  accustomed  capitalistic  development  came  about. 
A  quarrel,  at  first  mere  private  mutterings.  then  grow- 
ing into  an  obstreperous  conllict,  set  in  among  group-; 
of  magnate,-.  And  what  was  the  provocation?  Was  it 
one  of  personal  hostility?  Not  at  all.  The  cause  arose 
from  dissensions  as  10  the  division  of  the  spoils  in  the 

time,  a-  an  officer  of  the  New  York  Life  Insurance  Company. 
Perkins'--  method-  may  be  judged  by  the  following  incidental 
fact:  lie  took  nut  policies  for  SOo.ooo  on  ln>  life,  and  received 
aeeiit>'  commissions  en  hi-;  own  insurance.  Report  of  the  [Xev. 
York]  Legislative  Insurance  Committee,  lox/i.  x  :  85. 

'"  Tlu-  Equitable,  for  instance,  owned  $;n'j.^64.034  of  railroad 
and  traction  company  bond-,  the  Mutual  about  the  same  amount 
in  railroad  and  mi-cellaneou--  bonds,  and  the  Xe\v  York  a 
umilarlv  lame  am  Hint. 


268        HISTORY    OF    THE    GREAT    AMERICAN    FORTUNES 

Equitable  Life  Assurance  Society.  Magnate  arrayed 
himself  against  magnate,  and  group  opposed  group. 
The  clearer  it  became  that  the  fight  for  control  of  the 
stupendous  revenues  could  not  be  compromised,  the  more 
malignant  the  magnates  became.  The  stage  was  soon 
reached  when  ugly  charges  of  fraud,  graft  and  corrup- 
tion were  allowed  to  get  into  the  public  press.  Here 
was  a  spectacle  for  the  gods.  Xot  from  any  "  labor 
agitator/"  nor  from  any  ''  irresponsible  newspaper  "  did 
these  charges  come ;  nay.  they  came  from  some  of  the 
lordliest  magnates  in  the  land,  from  men  of  the  most 
"  unimpeachable  respectability."  Xow,  here  they  were 
vulgarly  accusing  one  another  of  being  liars,  frauds  and 
all-round  knaves. 

That  the  matter  made  a  loud  sensation  can  well  be 
understood  ;  newspaper  writers  diligently  applied  them- 
selves to  reporting  the  great  event.  Quarrels  among 
magnates  were  not  uncommon,  but  when  a  whole  array 
of  the  nation's  oligarchy  of  wealth  pushed  their  row 
into  the  open,,  and  began  bedamning  one  another,  it 
was  a  rare  opportunity  for  truths  to  come  out.  Xone 
but  the  magnate,-  themselves  could  open  the  door-  of 
their  holy  of  holies  and  reveal  the  mysteries  within. 
I 'raises  be  to  the  glorious  occasion,  they  were  now  doing 
this  verv  thing. 

I  hit  when  the  holy  of  holies  was  subjected  to  scrutiny, 
it  was  found  to  be  a  cesspool  from  which  long  pent-up 
noxious  exhalation-  burst  forth,  almost  threatening  to 
-uffocate  a  nation  that  had  been  taught  to  reverence 
the  aforesaid  holv  places.  The  quarrel  became  so  fierce 
lhal  a  swelling  popular  demand  sprang  up  for  a  leg- 
i-bitivr  committee  to  do  some  exhaustive  and  salubrious 
probing.  Tin-  demand,  at  least,  had  every  appearance 
of  being  a  -pontane«  ui-  popular  one;  but  it  can  }>'•  rea- 


MORGAN    AT    HIS    ZENITH 


sonably  surmised  that  after  trying  every  other  means 
of  ousting  the  group  of  magnates  in  power,  the  opposi- 
tion party  cleverly  investigated  the  popular  indignation 
in  order  to  compel  an  investigation,  and  discredit  the 
clique  in  control.  Subsequent  developments  proved  that 
Ilarriman  had  long  been  attempting  to  gain  exclusive 
control  of  the  massed  funds  of  the  Equitable  Life  As- 
surance Society.  In  addition,  his  own  testimony  attested 
the  fact  that  Governor  Odell  of  Xew  York  was  his  crea- 
ture, and  that  the  very  Legislature  which  ordered  the 
investigation  was  obedient  to  his  orders. 

From  the  first  sessions  of  that  investigating  commit- 
tee to  the  last,  the  story  unrolled  was  one  of  such  appal- 
ling fraud  and  corruption  that  the  very  enormity  of  it 
finally  deprived  it  of  effect.  One  after  another,  the 
magnates  were  haled  forth  to  the  light  ;  and  when  they 
retired  they,  the  "  great  captains  of  industry,"  the  su- 
premely respectable  products  of  society,  the  fine  mor- 
alists of  the  nation,  the  supporters  and  endowers  of 
charities  and  churches,  the  rulers  of  politics,  were  re- 
vealed as  perjurers,  bribers  and  thieves.  If  magnates 
desire  to  keep  up  the  myth  of  "  sterling  honesty,"  be- 
nevolence and  patriotism,  they  must  learn  not  to  quarrel 
among  themselves.  Otherwise,  they  will  tell  on  one  an- 
other, which  is  not  politic.  Kven  more  seriously. 
they  will  undermine  the  stanchions  and  "  pillars  of  so- 
ciety," one  of  which,  in  the  United  States,  is  the  popular 
belief  that  the  people  vote  their  rulers  in  and  out  of 
office,  and  shape  the  course  of  legislation. 


27O         HISTORY    OF    THE    GREAT    AMERICAN    FORTUNES 

to  the  magnates  to  have  the  secret  come  out?  Over  and 
over  again  was  that  secret  disclosed  in  past  investi- 
gations, but  without  instructive  results.  Yet.  behold ! 
the  people  once  more  have  the  opportunity  of  getting 
an  insight  into  what  goes  on  behind  the  scenes  when  the 
Legislative  Investigating  Committee  reports  in  1906: 

The  testimony  taken  by  the  committee  makes  it  clear  that 
the  large  insurance  companies  systematically  attempted  (sic) 
to  control  legislation  in  this  [Xe\v  York]  and  other  States, 
which  could  affect  their  interests  directly  or  indirectly.  The 
three  companies  divided  the  country,  outside  of  New  York  and 
a  few  other  States,  so  as  to  avoid  a  waste  of  effort,  each  look- 
ing after  its  chosen  district  and  bearing  its  appropriate  part  of 
the  total  expenses.10 

Excellent !  even  bribery,  like  industry,  becomes  sys- 
tematized and  modernized.  In  the  process,  delicate  ex- 
ternals are  preserved.  To  ledger  bribery  funds  as  cor- 
ruption money  is  a  gross  -hock  to  fastidious  taste,  and 
is  inexcusably  unbusinesslike.  Hence,  so  the  commit- 
tee reported,  bribery  expenditures  were  classified  as 
"  legal  expenses."  The  committee  described  them  as  ex- 
traordinarily large.  The  Mutual,  in  1904.  disbursed 
$364.254.95:  the  Equitable.  Si 72.698. 42,  and  the  Xew 
York,  with  Morgan's  partner,  Perkins,  practically  in 
command,  $204.01 9. 25. 1T  This,  according  to  the  simple 
rules  of  arithmetic,  made  a  total  of  more  than  three- 
quarters  of  a  million  dollars  spent  in  one  year  in  the 
corrupting  of  legislature.-,  administrative  officials  and 
certain  newspaper  writers.18  These  "  legal  expenses," 
the  committee  redundantly  wrote,  were  "  far  in  excess 

16  Report   of  the    [Xew   York]    Legislative   Insurance   Commit- 
tee, i  oof),  x  :  23 

17  Ibid.,   [6.  ' 

8  The  ti>ti:r.ony  showed  lhat  many  newspaper  writers  had 
received  large  sums  for  the  -upprcssion  of  articles  revealing  the 
methods  of  tlie.-e  companies. 


MORGAN    AT    HIS    ZKXITIF  2/1 

of    the    amounts    required    for    legitimate    purposes." 

For  what  were  these  corruption  funds  employed  ? 
To  get  laws  under  which  great  frauds  could  be  carried 
on.  and  to  prevent  the  passage  of  laws  interfering  with 
the  graft.  And  who  were  the  immediate  distributers 
of  the  funds?  Trained,  circumspect  lobbyists,  thor- 
oughly experienced  in  the  business  of  knowing  who, 
when  and  where  to  bribe.  They  were  never  stinted  for 
money.  Andrew  C.  Fields,  long  engaged  by  the  Mutual 
Life  Insurance  Company  to  manipulate  legislation  at 
.Albany,  held  forth  in  a  sumptuously  furnished  house 
there.  This  headquarters  was  jocosely  styled  the 
''  House  of  Mirth!  "  The  rent  and  other  expenses  were 
charged  to  "  legal  expenses."  The  Mutual  thus  ex- 
pended more  than  $2,000,000  in  "  legal  expenses  "  from 
1898  to  1904.-°  And  what  were  those  of  the  Xew  York 
Life  Insurance  Company?  From  1895  to  1904.  the 
total  payments  to  Andrew  Hamilton,  its  principal  lobby- 
ist, amounted  to  $1.312,197.16,  all  of  which  sum  was 
soberly  entered  as  "legal  expenses."-1  J.  P.  Morgan 
and  Company  made  advances  of  money  to  Hamil- 
ton.-2 

Rut  the  corruption  neither  began  nor  ended  with  the 
buying  of  legislative  votes  or  of  administrative  conni- 
vance. Over  and  above  the  politicians  in  office  were  the 
busses  in  control  of  the  machinery  of  both  the  Repub- 
lican and  the  Democratic  parties.  Those  party  machines 
could  command  the  votes;  and  the  orders  of  the  men  at 

19  Report  of  the  I  Now  York]  Legislative  Insurance  Commit- 
tee, 1906,  x  :  16. 

-°  Ibid..   16 

21  Ibid..  50. 

--  Ibid.,  49.     For  instance,  J.   I'.  .Morgan  and  Company,  in  Oc 
tober.    1<)O2.    advanced    $50.310.70    to    Hamilton.     Tbis    sum    was 
deducted  from  the  profits  of  the  Xew  York  Life  Insurance  Com- 
pany.    Hamilton  was  not  required  tu  make  any  accounting. 


2J2         HISTORY    OF    Till:    GREAT    AMERICAN    FORTUNES 

the  head  called  for  submission  by  the  underling  politi- 
cian-. Refusal  brought  discipline  and  retirement.  By 
controlling  the .  secret  workings  of  the  party  organiza- 
tions, the  magnates  virtually  controlled  the  platforms  of 
those  parties,  their  nominees,  and  the  general  course  of 
the  men  elected  to  office. 

For  one  more  proof  of  this,  another  dip  into  the  re- 
port of  that  celebrated  insurance  investigating  committee 
of  1905  will  suffice.  "  The  insurance  companies,"  it  re- 
ported. "  regularly  contributed  large  sums  to  the  cam- 
paign funds  of  both  the  Republican  and  the  Demo- 
cratic parties."  This  was  no  exceptional  act,  however: 
it  was  the  conventional  order  of  the  day ;  all  of  the  great 
corporations  did  likewise.  Had  not  Jay  Gould,  thirty- 
odd  years  before,  explained  the  method?  And  had  not 
other  capitalists  long  antecedent  to  Jay  Gould  shown 
how  efficacious  it  was?  .-V  present  of  nearly  850,000 
was  contributed  in  1894  ^.v  tnc  Xew  York  Life  In- 
surance Company  to  the  campaign  fund  of  the  Repub- 
lican National  Committee,-"  and  similar  amount-  in  1896 
and  in  1900  for  the  same  purpose.24  All  of  the  large 
insurance  companies  gave  contributions,  not  only  for  na- 
tional political  campaign?,  but  also  for  those  in  the 
States.-'"'  It  was  found  impossible  to  trace  all  of  the 
direction-  of  this  continuous  corruption.  "  Enormous 
sum-."  the  committee  stated,  ''  have  been  expended  in  a 
surreptitious  manner." 

The  immen.-e  sums  thus  spent  in  political  corruption 
were  .-tolen  from  the  proceeds  of  the  policyholders. 

-:;  Report  of  the  [Xe\v  York]  Legislative  Insurance  Committee, 
1006.    \  :  62. 
-*  [hid. 

lave    $;o,ooo    in 


MORGAN    AT    1118    ZENITH  2J $ 

With  this  stolen  money,  mounting  into  millions  of  dol 
lars,  the  magnates  bought  their  way  into  every  State 
legislature  in  the  Union  ;  they  purchased  a  way  for  them- 
selves or  for  their  allies  into  the  United  States  Senate  : 
and  they  carried  their  demands  in  both  the  Republican 
and  the  Democratic  parties.  An  arraignment  more 
destructive  to  the  existing  arrangement  of  society  could 
not  be  found  than  was  contained  in  the  facts  (and 
they  were  by  no  means,  all  of  the  facts )  reported  by  that 
committee.  The  substantial  conclusion  was.  although 
not  set  forth  in  so  many  plain  words,  that  the  adminis- 
trative officials,  the  legislatures.  Congress,  the  courts  and 
the  old  political  parties  were  controlled  and  dominated 
by  groups  of  unparalleled  frauds  and  pirates.  For  the 
sums  diverted  to  insure  this  political  control  were  only 
a  tithe  of  the  aggregate  stupendous  thefts.  Following 
close  upon  the  investigation  came  suits  against  the  "  high 
financiers"  for  the  restitution  of  more  than  $10.000,- 
ooo.  and  these  suits  were  but  indications  of  still  vaster 
sums  fraudulently  taken.  The  suits  were  compromised. 

DARK    DAYS    FOR    RESPECTABILITY. 

It  was   a  period   of  travail    for   respectability ;   much 

explaining  had  to  be  done,  which  (in  such  a  case)  is 
always  a  confession.  The  directors  or  swayers  of  those 
insurance  companies  comprised  some  of  the  most  super- 
eminent  magnates  and  exalted  philanthropists  in  the 
I'nited  States.  Elegant  society  suffered  no  shock  at  the 
revelations,  for  it  was  built  and  sustained,  every  part 
and  woof  of  it.  by  theft,  fraud,  bribery  and  exploita- 
tion. 

But    the    apologists    and    retainers,    whose    vocation    it 
was  to  strew  praise  in  tlu   path  of  the  money  monarch^, 


274         HISTORY    01'    THI-:    GREAT    AMKRICAX    FORTUNES 

were  egregiously  put  out  of  face.  What  could  they  say 
when  such  of  their  heroes  as  George  J.  Gould,  Alfred 
G.  Vanderbilt.  John  Jacob  Astor,  August  Belmont, 
Jacob  H.  Schiff.2'5  Henry  C.  Frick,  D.  O.  Mills,  and 
many  others  were  being  shown  up  either  as  participants 
or  as  responsible  heads?  More  galling  still  was  the  be- 
smearing of  their  great  idols,  E.  H.  Harriman,  and  above 
all,  the  devout  and  philanthropic  J.  Pierpont  Morgan.27 
All  of  these  money  conquerors  had  been  interminably 
glorified :  nothing  had  been  too  extravagant  to  say  of 
them  ;  and  now  they  could  be  seen  twisting  and  squirm- 
ing in  the  uncomfortable  act  "of  being  caught." 

Good  repute  may  be.  as  the  poets  and  philosophers 
say.  a  priceless  possession.  P>ut  these  magnates  did  not 
mind  the  temporary  hurt.  For  temporary  it  surely  was  ; 
a  little  time  would  pass,  and  then  the  newspapers,  mag- 
azines, college  presidents  and  clergy,  largely  owned  or 
subsidized  by  the  magnates,  would  resume  their  inter- 
rupted chorus  of  prai.-e.  and  all  would  be  well  again.  A 
bit  of  the  plunder  thrown  out  to  universities  and  churches 
would  add  to  the  magical  effect. 

Hence,  it  was  not  any  loss  of  reputation  that  the  mag- 
nates and  their  satraps  feared.  The  one  and  only  dis- 

26  The  Equitable  Life  Assurance  Society  "loaned  immense 
sums  "  to  Kuhn,  Loeb  and  Company,  of  which  SchifT  was  a  lead- 
ing member.  (Ibid.,  118.)  These  fund-,  in  large  part,  were 
turned  over  to  Harriman  for  use  in  hi-  railroad  gathering  and 
centralizing  projects.  SchitT  pa-sed  in  public  a>  one  of  the 
benevolent  philanthropists  of  the  time. 

-~  The  extent  of  Morgan's  utilization  of  insurance  money  wa- 
-ho\vn  by  the  legislative  investigating  committee.  "  The  evidence 
is,"  it  reported,  "that  while  Mr.  Perkins  has  been  a  member  of 
J.  P.  Morgan  and  Company,  the  Xew  York  Life  has  purchased 
from  it  securities  of  the  par  value  of  $39,286,075  for  the  price  of 
$38.804.981.51.  (Report  of  the  [Xew  York)  Legislative  Insur- 
ance Committee,  1906:811.  Superficially,  the  report  suggest  ^ 
that  the  Xew  York  Life  Insurance  Company  thus  obtained  "a 
bargain  "  in  the  purchase  of  these  securities.  In  reality,  much 
of  the  securities  comprised  "  watered  ''  stocks. 


MORGAN    AT    HIS    XKXITH  2/5 

quieting  prospect  was  that  of  being  shunted  away  to  pris- 
ons. Throughout  the  United  States  the  insurance  dis- 
closures — •  the  outcropping  facts  as  to  the  vast,  long- 
continuing  corruptions  and  frauds  —  had  called  forth  a 
frenzied  demand  at  first  that  the  guilty  be  rushed  to 
trial  and  imprisoned. 

But  that  demand,  if  carried  out,  would  have  entailed 
a  unique  and  unprecedented  situation.  Should  all  of  the 
guilty  be  jailed,  or  even  a  number  of  them,  the  nation 
would  have  been  deprived  of  many  of  its  foremost  mag- 
nates, its  greatest  philanthropists,  its  most  exemplary 
patriots.  llo\v  could  society  have  survived  such  a  loss? 
According  to  orthodox  teachings,  these  men  were  im- 
perative to  the  proper  administration,  and  the  well-be- 
ing, of  the  whole  social  and  industrial  system.  Incar- 
cerate the  great  magnates,  philanthropists  and  patriots, 
even  though  they  were  also  the  greatest  plunderers? 
The  thought  was  impossible. 

Xo  fear  of  prison,  however,  need  have  been  entertained 
by  the  implicated.  Had  not  many  an  investigation  been 
held  before,  decade  after  decade,  almost  year  after  year, 
sometimes  several  investigations  in  a  single  year?  J  lad 
any  of  the  rich  dcfrauders  disclosed  in  those  investiga- 
tions ever  gone  to  prison?  What  ground  was  there  for 
supposing  that  tin's  investigation  would  result  any  differ- 
ently? In  a  society  ruled  by  money,  what  are  court- 
for  but  to  be  used  as  a  minatory  instrument  for  enforc- 
ing the  law,  made  by  the  rich,  against  the  propcrtyless? 
What  are  judge-  for  except  to  con-true  that  law  as  the 
magnates  who  put  them  on  the  bench  demand  that  it 
be  construed  ?  -^ 

-*  It  is  quite  needless  to  reiterate  here  facts  (already  brought 
out)  regarding  the  methods  by  which  appointments  and  elections 
to  the  bench  were  made  by  the  tfmit  property  interests.  Later 


276        HISTORY    OF    THE    GREAT    AMERICAN    FOKTL'N  i:.:> 

Xot  the  law  so  much  a-  the  interpretation  is  what  es- 
sentially counts. 

THE    MAGNATES    ESCAPE    THE    LAW. 

I  low  the  law  was  interpreted  was  soon  seen.  Under 
the  pressure  of  public  opinion,  the  District  Attorney  of 
Xew  York  County,  one  \Yilliam  Travers  Jerome  (long 
renowned  as  a  "  reformer  ")  finally  caused  the  Grand 
Jury  to  take  action  in  proceeding  against  a  few  of  the 
satraps  and  the  figureheads.  But,  in  the  case  of  Per- 
kins, for  instance,  it  was  decided  that  if  he  had  com- 
mitted grand  larceny,  it  had  been  done  without  criminal 
intent.  The  thousands  of  poor  offenders  hurried  off  to 
prison  were  obviously  afflicted  with  an  overabundance  of 
this  same  criminal  intent.  Yet  for  a  rich  and  powerful 
man  to  commit  any  fraud  with  criminal  intent  was  a 
principal  unknown  to  practical  jurisprudence.  The  farce 
dragged  out  a  while:  not  one  of  the  participants  of  great 
wealth  was  even  incommoded  by  the  formality  of  a  trial.29 

And  what  was  the  outcome  of  that  extraordinary  in- 
vestigation ?  Again  was  >een  the  operation  of  that  prin- 
ciple so  often  brought  out  in  these  chapters  ;  that  every 
"  reform  wave  ''  of  a  capitalist  order  of  society  is  used 
by  the  great  capitalists  to  aggrandize  their  wealth  and 
power.  Taking  advantage  of  the  popular  discredit  of 
the  large  insurance  companies,  and  making  fine  asser- 
tions of  the  reforms  that  he  intended  to  bring  about. 

on,  a  full  elucidation  of  this  subject  will  be  Riven,  as  also  a  de- 
scription of  the  criminal  law  as  applied  to  the  pour. 

'•'  i  IK-  tacts  thus  generalized  are  >o  notorious  that  it  is  hardly 
necessary  to  specify  at  length.  Although  he  was  much  de- 
nounced, Jerome  did  not  deviate  from  the  uniform  practice  (a- 
>o  often  throughout  thi-  work)  of  enforcing  the  laws 
vigorously  against  the  poor,  while  allowing  the  rich  frauds  and 
t'niever-  to  go  scot  free.  At  one  time,  a  "popular  hero,"  Jtronu 
went  out  of  office  thoroughly  discredited  in  public  opinion. 


MORGAN    AT    11  IS    ZENITH  2/7 

Thomas  F.  Ryan  secured  control  of  the  Equitable  Lile 
Assurance  Society,  completely  frustrating  Harriman's 
efforts  to  the  same  end.  Ryan's  career,  and  the  facts  as 
to  how  he  obtained  his  immense  wealth,  were  so  generally 
known,  that  his  appearance  in  the  role  of  a  "  reformer  " 
was  the  signal  for  an  instantaneous  outburst  of  public 
sarcasm  which  Ryan  did  not  at  all  mind,  seeing  that  he 
had  carried  his  assault.30 

Enough,  however,  of  the  methods  by  which  these  vast 
insurance  funds  were  manipulated  for  politico-financial 
ends.  The  sensation  caused  by  the  revelations  was  as 
profound  as  the  reaction  that  followed.  For  a  brief 
period  the  mass  were  privileged  to  have  a  look  behind 
the  scenes,  get  wrought  up  at  what  they  saw,  and  then 
the  curtains  were  drawn  again  and  the  old  comedy  was 
resumed.  The  intense  popular  excitement  flattened  out 
into  the  sheerest  lassitude. 

\Yhat  noteworthy  changes  resulted  from  all  that  pro- 
tracted boring,  ten  solid  volumes  of  it?  Xone.  Some 
lawyer  folk  grasped  political  advancement  out  of  it, 
others  enriched  themselves  from  a  trail  of  litigation,  a 

30  In  his  speech  in  the  United  States  Senate  on  March  17.  1907, 
Senator  La  Follette  thus  referred  to  Ryan: 

"  The  Metropolitan  Interhoroutih  Traction  Company  cleaned 
up.  at  the  lowe-t  estimate,  $100.000.000  by  methods  which  should 
have  committed  many  of  the  participants  to  the  penitentiary. 
The  public  and  the  stockholders  were  robbed  alike.  That  divi- 
dends were  paid  with  borrowed  money  purely  to  stock  ioh  ihe 
public  is  now  known  to  a  certainty.  Stock  was  thus  balloonvd  to 
$j<  i'\  per  share,  which  .coes  bctrgin.e  now  at  $35.  The  insider- 
robbed  the  company  on  construction  of  upwards  of  ?4O.oooooo. 
Investigation  lias  disclosed  that  St.otio.otx)  was  spent  as  a  •  ycilow- 
do.tr  fund  '  for  corrupting  public  officials.  In  1886  Thomas  F. 
Ryan  was  ;i  poor  man.  In  K)O5  Henry  1).  McDonou^h,  his  offi- 
cial representative,  estimated  Ryan's  fortune  at  fifty  millions. 
'I  lu-  foundation  of  ail  hi.-  weahh  and  poucf  wa-  the  Metropolitan 
Street  Railway."  "Centralization  and  Community  Control  of 
Industry,"  etc.  (Government  Doc.),  24.  Ryan's  career  will  be 
fully  described  in  thai  part  of  tlii-  work  comprising  "Great 
Fortune-  Fmm  Public  Franchises." 


HISTORY    OF    'I  HL    GREAT    AMERICAN    FORTUNES 


few  minor  laws  were  passed,  and  one  set  of  capitalists 
was  deposed  to  make  place  for  another.  And  that  was 
the  finis  of  this  great  investigation  which  was  to  have 
brought  such  "  beneficial  reforms." 

One  of  the  most  remarkable,  and  at  the  same  time 
most  comical,  features  of  American  political  life  in  the 
nineteenth  and  twentieth  centuries  was  the  frequency  of 
these  official  investigations.  Survey  the  archives  and 
you  will  be  bewildered  by  their  number  and  continuity, 
extant  in  the  form  of  printed  testimony  and  reports. 

These  were  not  investigations  made  by  a  hostile 
officialdom,  but  by  governing  authorities,  either  repre- 
senting the  very  capitalistic  interests  investigated,  or 
favorable  to  them.  The  numerous  investigations  may, 
therefore,  be  accepted  as  those  of  capitalist  society  dis- 
closing itself.  Everyone  of  them  reveals  ihe  same  story 
of  fraud,  corruption  and  theft,  from  which  not  a  single 
line  of  business  was  exempt.  The  stupendous  extent  of 
the  incessant  and  deliberate  lying  carried  on  by  capital- 
ist expositors  may  at  once  be  seen  by  comparing  their 
fulsome  accounts  of  capitalists  and  of  the  capitalistic 
system  with  the  facts  perpetuated  in  the  reports  of  the 
capitalists'  own  Government.  Xot  one  of  those  investi- 
gations carried  with  it  any  real  salutary  benefits  for  the 
people;  after  every  such  inquisition  the  mass  were  plun- 
dered and  despoiled  as  effectively  as  before  —  almost  in- 
variably more  so.  Apparently  the  only  inherent  virtue 
of  those  investigations  seems  to  have  been  that  of  sup- 
;  lying  thi-  pre-ent  author  with  facts  —  a  not  inconsider- 
•  :rii;e,  it  may  be  appreciatively  added."1 

fore,    y.ilii   this   knowledge,   wonder  can   be   expressed 

•'..    "insurance  iniquities  "    (as  they   were   styled)    were  not 

rri    r.atdy    viewed.      In    aanality,    j/reat    a-    they    were,    they 

1  '    ihe   merest   fragment-  of  a  collossal  network  of   fraud, 

ion    and    graft,    covering:    every    department,    branch    and 

!-:i':d  of  iiu-ine??  and  old-party  politics. 


MORGAN    AT    HIS    ZKMTH 


But  what  of  those  virtuous  middle-class  investors  who, 
when  tricked  and  defrauded  by  the  magnates,  plaintively 
put  themselves  on  exhibition  as  outraged  and  helpless 
victims  of  a  crew  of  unscrupulous  financiers?  1  low,  for 
example,  did  the  many  investors  in  Steel  Trust  stock 
regard  the  great  Morgan  after  their  disillusioning  and 
spoliation?  They  broke  out  in  passionate  imprecations. 
Throughout  the  country  you  met  them  even-where  be- 
wailing their  lo.-ses  ;  some  of  their  thousands,  others  of 
their  tens  of  thousands,  and  still  others  of  their  hundreds 
of  thousands  of  dollars.  In  many  another  \\all  street 
onslaught,  the  losers  could  not  specifically  blame  Mor- 
gan ;  but  in  the  Steel  Trust  stock-rigging  he  was  so 
palpably  the  principal  moving  spirit,  that  necessarily 
this  bitterness  was  directed  at  him.  To  the  point  of 
nausea  the  charge  was  repeated  that  fraud  had  brought 
about  the  stripping  or  ruin  of  those  innocent,  confiding 
investors  ;  :!-  fraud  did  it  all,  fraud  explained  the  whole 
process. 

Delicious  innocence  !  Not  an  individual  was  there 
among  those  self-commiserating  investors  who  would  not 
have  been  elated  to  have  profited  in  the  stock  market  at 
the  expense  of  other  investor.-.  Had  such  been  the  out- 
come. the  transaction  would  have  been  highly  legitimate 
and  just.  The  crime  consoled  in  the  magnates  exclu- 
-ively  pock-ding  the  booty.  This  at  once  Iran-formed 
the  operation  into  one  of  betrayal,  injustice,  fraud  and 
>ppression  —  term.-  springing  spontaneously  from  the 
•niddlc  clasr-  whenever  its  pocket  i-  drained.  Then  came 

"'-'.Many   'if   these   investors   were   nut,   of   course,   despoiled   of 

thi'ir   entire    Fortune1.     Thus,   a   >mail   manufacturer   mitdit    invest 

>-'j  .  <•<•<•>   df    his    fortune    in    Steel    Tru-t    stock,    ami    ln-,e   a   irreat 

part   of  the  investment   in   -dlin^  on!   at   a  very  much  lower  price 

;;   ;ha(    at    which   he  hnd  hou.jlu   i  .      As  the  market   price  kept 

ending  he  \\-om1  d  conclude  to  -eil  out  licfort  hi-  losses  would 

be   qreater,     The    "margin"    investor.-    -uttered    much    worse. 


280         HISTORY    or    THE    GREAT    AMERICAN    FORTUNES 

that  old  familiarly  dolorous  plaint  of  its  grievance.- . 
And  would  the  terror  of  law  never  descend  upon  the 
supersubtle  corporate  greed  that  was  swindling  and  de- 
vouring the  virtuous  middle  class,  "  the  backbone  of  the 
country  "  ? 


THE    SOURCE    OF    PROFITS. 

Agitated  over  their  own  misfortunes  and  expropria- 
tion, these  investors  excoriated  Morgan  and  the  other 
magnates.  And  their  actuating  reason  was  what?  That 
of  not  being  allowed  to  have  a  hand  in  the  profits.  'Who 
has  not  heard  pigs  squeal  when  a  hog  usurps  the  trough  ! 
And  what,  further,  were  the  basic  conditions  from  which 
these  investors  eagerly .  strained  for  profits,  either  in 
-lock  gambling  or  in  dividends? 

The  value  of  the  stock  depended  at  bottom  upon  the 
trade  profits  of  the  business.  Those  profits  came  from 
the  labor  in  the  mills  and  the  exploitation  of  the  manu- 
factured product,  the  price  of  which  exploitation  was 
indirectly  taxed  upon  the  working  class  wherever  steel 
was  sold  or  used.  Were  the  petty  investors,  so  clamor- 
ous for  their  own  security  and  comfort,  uneasy  at  the 
condition.-  under  which  masses  of  men  and  boys  worked 
in  the  iron  and  coal  mines  and  in  the  steel  manufacturing 
plant.-?  Did  they  experience  any  qualms  at  the  long 
hour-  and  low  pay.  and  the  squalid,  often  revolting,  life 
to  which  those  workers  were  forced?  Did  the  bestial 
degradation  and  frightful  destitution  so  often  encount- 
ered in  -u-rl-mill  quarters  disturb  their  thoughts?  Or 
were  they  impressed  by  the  gha-tly  casualties  in  the 
mills.  MI-  the  diseases  rife  in  the  workingmen's  quarters, 
causing  an  undiminished  slaughter  of  men.  women  and 
:  Did  the  investor-,  whose  understanding  of  in 


MORGAN    AT    lilS    ZliNlTH  251 

justice  was  so  sensitively  acute  when  they  were  robbed 
or  in  distress,  see  any  injustice  in  such  conditions? 

In  this  exploitation  they  saw  nothing  by  a  "  right- 
eous "  system  of  industry  from  which  they  eagerly  sought 
profit.  They  were  not  ignorant  of  the  existence  of  these 
conditions;  it  was  with  a  knowledge,  not  always  full, 
but  some  realization,  nevertheless,  of  them,  that  they 
sophisticatedly  bought  Steel  Trust  stock  to  share  in  the 
profits.  When  an  exposure  was  made,  in  1908,  of  some 
of  these  conditions,  not  more  than  a  handful  of  stock- 
holders protested  against  the  horrors  ;  exceptions  among 
their  class  to  which  we  gladly  draw  attention.  In  its 
long  duel  with  the  magnates,  the  middle  class  ever  and 
always  insisted  that  its  grievances  be  heard  and  respect- 
full}-  treated.  Yet,  let  the  workers  make  the  slightest 
move  for  redress,  and  that  class,  with  stony  rigidity, 
would  demand  their  repression  as  "  disturbers  of  busi- 
ness," if  for  no  other  reason. 

To  describe  those  conditions  at  length  would  be  an 
inappropriate  anticipation  of  another  part  of  this  work- 
to  which  the  description  is  more  germane.  Some  glimp- 
ses, however,  will  be  to  the  point.  Xor  will  the  facts  be 
drawn  from  working-class  spokesmen  and  writers.  Do 
not  the  conventions  of  the  day  condemn  these  as  un- 
worthv  of  credence  and  citation?  Observe  with  what 
immense  respect  legislatures.  Congress,  the  courts,  edi- 
tors and  literarv  reviewers  treat  the  trashiest  utterance- 
of  capitalists,  and  swear  by  their  value  and  authenticitv. 
But  working-class  memorials,  protests  and  statement- 
are  obviously  the  productions  of  "rabid  agitators"  ; 
thev  "  chronically  exaggerate  "  and  are  "  partial  and  par- 
tisan." Since  capitalists  (and  their  retinue  of  scribes  i 
alone  possess  the  high  virtue  of  complete  veracity,  cita- 
lions  from  such  source-  will  perhaps  carry  weight. 


282         J11STUKV    OF    THE    C.REAT    AMERICAN    FORTUNES 

What  i>  this  extraordinary  document  we  hold  in  our 
hand?  It  is  a  report  entitled  "The  Pittsburg  Survey," 
the  same  being  an  exhaustive  investigation  of  the  con- 
ditions of  the  working  class  of  Pittsburg.  Scrutinizing 
further,  we  find  that  this  investigation  was  carried  on 
by  means  of  funds  contributed  by  "  The  Russell  Sage 
Endowment."  s"  That  fact  enhances  its  prestige  for  ci- 
tation purposes.  What  is  this  further  fact  we  note  on 
the  bottom  of  the  cover?  That  the  report  has  been 
published  in  a  magazine  conducted  by  the  Charity  Or- 
ganization Society  of  Xew  York  City,  under  which  title 
appears  —  what?  The  name  of  J.  Pierpont  Morgan,  as 
treasurer  of  that  society.  Xo\v  we  are  invulnerably  on 
safe  footing.  To  a  report  issued  under  >uch  exalted  aus- 
pices, who  would  be  so  reckless  as  to  impute  inaccuracy 
or  impartiality?  More  especially  so,  inasmuch  as  this 
report  has  been  generally  commended  for  its  accuracy  — 
an  accuracy,  it  may  be  added,  toned  with  an  extremely 
conservative  treatment. 


On.    then,    with    the    quoting.      '  The    United    States 

Steel   Corporation."   the   report    said.. 

owns  properly  on  the  South  Side  of  Pittsburg  just  beyond  the 
Point  Bridge.  Here  is  located  the  old  Painter's  Mill,  which 
I-  one  of  the  plants  of  the  Carnegie  Steel  Company,  which  in 
:;,rn  is  one  of  the  constituent  companies  of  the  United  States 
Sted  Corporation;  and  here.  also,  stands  what  remains  of 

''The    Russell    Sage    F.ndo\vinent  " — a    fund    amounting    to 

ninny    millions    of    dollars,   given    by    Sage's    widow    for    (among 

other  purposes)    the  pnrpo.-e  of  investigating  the  conditions  pro- 

poverty.      Part  of  the  money  robbed  by  Sage  in  previous 

is  ihr,.;  tt-ed  to  find  out   why  so  many  millions  of  '    •• 

itirui      are      in      destitution.     What     a     grotesque 


MORGAN    AT    111S    ZliNITH  283 

Painter's  Row,  where  the  company  has  housed  certain  of  its 
employes,  mostly  immigrants.  When  the  Carnegie  Steel  Com- 
pany took  over  Painter's  Mill,  it  renovated  the  plant  so  as  to 
turn  out  the  sort  and  quantity  of  output  which  the  Carnegie 
name  stands  for.  When  it  took  over  Painter's  Row,  it  did 
nothing.  When,  a  little  over  a  year  ago,  and  several  years  after 
the  purchase  of  the  property,  I  made  a  detailed  investigation 
of  the  place,  I  found  half  a  thousand  people  living  there  under 
conditions  that  were  unbelievable  —  back-to-back  houses  with  no 
through  ventilation ;  cellar  kitchens ;  dark,  unsanitary,  ill-venti- 
lated, over-crowded  sleeping  rooms,  no  drinking  water  supply  on 
the  premises  ;  and  a  dearth  of  sanitary  accommodations  that  was 
shameful.34 

The   writer  hastens  to  add  : 

The  story  of  Painter's  Row  should  be  considered  in  its  bear- 
ings. The  United  States  Steel  Corporation  is  building  a  re- 
markable new  town  at  Gary,  Indiana;  its  subsidiary  companies 
have-  promoted  house  building  along  original  lines,  notably  at 
Vandergraft,  Ambridge  and  Lorain,  and  the  Carnegie  Steel 
Company  has  fair,  low-rental  houses  at  Munhall  and  elsewhere. 
On  the  other  hand,  other  Pittsburg  corporations  own  company 
houses  which  have  been  equally  as  bad  as  Painter's  Row;  and  a 
similar  story  could  be  written  of  a  shack  at  one  time  owned  by 
one  of  the  foremost  Protestant  churches  of  Pittsburg,  and  razed 
to  the  ground  only  because  the  headworker  of  Kingsley  House 
had  the  courage  to  publish  its  picture  and  the  name  of  the 
owner. 

PainterV  Row  has  been  improved,  it  is  reported,  since 
the  publication  of  the  report :  the  Steel  Trust  officials 
were  driven  to  it  by  the  resulting  publicity.  But  Paint- 
er's Row  is  only  a  typical  incident  in  a  vast  accumula- 
tion of  poverty  and  misery,  to  be  met  with  everywhere 
in  the  steel  mill  towns.  That  qualifying  note  regarding 
the  erection  of  fine  new  houses  for  the  workers  in  (larv 


284         HISTORY    OF    THE    GREAT    AMERICAN     FORTUNES 

and  other  Steel  Trust  towns  has  an  altruistic  touch  ;  very 
melodiously  and  enthusiastically  it  rolls  along.  Yet  we 
have  seen,  in  the  case  of  the  town  of  Pullman,  how  these 
"  model  towns  "  work  out :  how  the  workers  are  reduced 
to  a  state  of  serfdom,  exploited  at  every  turn  in  the  mills 
rind  out;  and  such  efficiency  as  comes  from  fairly  decent 
living  quarters  simply  redounds,  as  a  "  good  investment," 
to  the  profit  of  the  mill  owners.  Of  the  conditions  noted 
further  in  Pittsburg,  one  more  extract  from  the  volumin- 
ous report  (which  might  well  be  termed  a  Chamber  of 
Horrors)  will  give  an  additional  insight: 

.  .  .  Tt  is  a  common  opinion  in  the  district  that  some  em- 
ployers of  labor  give  the  Slavs  and  Italians  preference  because 
of  their  docility,  their  habit  of  silent  submission,  their  amen- 
ability to  discipline,  and  their  willingness  to  work  long  hours 
and  overtime  without  a  murmur.  Foreigners  as  a  rule  earn  the 
lowest  wages  and  work  the  full  stint  of  hours.  I  found  them 
in  the  machine  shops  working  sixty  hours  a  week ;  at  the  blast 
furnaces  working  twelve  hours  a  day  for  seven  days  in  the 
week.  The  common  laborer  in  and  around  the  mills  works  sev- 
enty-two hours  a  week.  The  unit  of  wages  is  an  hour  rate  for 
day  labor  and  a  Slav  is  willing  to  take  the  longer  hours  (twelve 
hours  a  day  for  men  who  work  fourteen  and  sixteen  in  the 
fatherland)  with  extra  work  on  Sundays,  especially  in  connec- 
tion with  clearing  the  yards  and  repairing.  Possibly  sixty  to 
seventy  per  cent,  of  the  laborers  in  the  mills  come  out  Sunday." 
and  the  mechanics  and  other  laborers  on  occasions  work  thirty- 
six  hours  in  order  that  the  plant  may  start  on  time.  In  one 
mill  I  found  Russians  (Greek  Orthodox)  in  favor  for  the  rea- 
son that  they  gladly  worked  on  Sundays. 

Many  work  in  intense  heat,  the  din  of  machinery  and  the 
noise  of  escaping  steam.  The  congested  condition  of  most  of 
the  plants  in  Pittsburg  adds  to  the  physical  discomforts  for  an 
out-of-doors  people;  while  their  ignorance  of  the  language  and 
of  modern  machinery  increases  the  risk.  How  many  of  the 
Slavs.  Lithuanians  and  Italians  arc  injured  in  Pittsburg  in  one 
year  is  not  known.  No  reliable  statistics  are  compiled.  In  their 


MORGAN   AT  ins  XKXITH  285 

absence  people  guess,  and  the  mischief  wrought  by  contradictory 
and  biased  statements  is  met  on  all  hands.  When  I  mentioned 
a  plant  that  had  a  bad  reputation  to  a  priest,  he  said,  "  Oh,  that 
is  the  slaughter-house  ;  they  kill  them  there  every  day."  I  quote 
him  not  for  his  accuracy,  but  to  show  how  the  rumors  circu- 
late and  are  real  to  the  people  themselves.  It  is  undoubtedly 
true,  that,  exaggerated  though  the  reports  may  be,  the  \\aste 
in  life  and  limb  is  great,  and  if  it  all  fell  upon  the  native  born 
a  cry  would  long  since  have  gone  up  which  would  have  stayed 
the  slaughter.35 

These  are  but  the  most  cursory  views  of  a  few  of  the 

prevailing  conditions.  All  of  the  bond  and  stock  hold- 
ers, large  and  small,"6  great  magnates  and  little  parasites, 
not  merely  have  acquiesced  in  these  conditions,  but  have 
insisted  upon  their  continuance,  upon  the  principle  (so 
often  referred  to  in  the  course  of  this  work)  that  the 
lower  the  wages  and  longer  the  hours  of  work,  the  se- 
ductively greater  the  dividend  prospects.  Splendid  man- 
sions, as  capacious  and  ornamental  as  palaces,  arise  upon 
the  tense  labor,  the  suffering  and  the  mortality  of  those 
masses  of  workers.  Carnegie,  pompously  spreading  his 
philanthropy,  draws  his  income  from  the  very  life  blood 
of  those  workers  and  their  families  and  children,''17  and 
A  I  organ,  piously  dispensing  charity,  officiating  at  relig- 
ious meetings,  and  posing  as  the  incarnation  of  princely 
benevolence,  allows  no  such  impractical  considerations  as 

"••"'''The  Pittsburg  Survey,''  i :  537  and  539.  The  Carnegie 
Steel  Company  began  several  decades  ago  the  systematic  hiring 
of  immigrant  workers.  The  average  pay  of  these  workers  i- 
$[.6o  a  day. 

•"'But  the  lew  exceptions  noted  previously, 

37  "  One-third  of  all   who  die  in   Pittsburg.  die  without  having 
anything    to    say    about    it.     That    is.    they    die    under    five    year- 
of    age.     One- fourth    of    all    who    die.    die    without    having    any 
thing  to   say  about   anything.     That    is,   ihey  die   under  one  year 
of    age.      MOM    of   these    deaths    are    preventable,    being   the    out 
come   of   conditions   which,   humanly   -peaking,   have  no   right    to 
exist."     This  slaughter  is  greatly  caused  by  impure  milk  and  bad 
housing  condition-. — "The   Pittshurg  Survey,"  ii :  943. 


^86        HISTORY    OF    THK    GRKAT    AMERICAN    FORTUNES 

pity  or  sentiment  to  make  life  even  a  moiety  more  toler- 
able in  the  roaring  hells  from  which  are  derived  an  aver- 
age of  $145,000,000  net  profits  a  year."8 

38  The  American  Federation  of  Labor,  at  its  annual  meeting 
at  Toronto,  in  November,  1909,  declared  that  the  Steel  Trust 
was  actively  bent  upon  destroying  labor  unions,  and  that  it  \vas 
the  foremost  aggressor  in  this  move.  The  object  i-  to  reduce 
the  workers  to  a  still  greater  condition  of  servitude. 

The  stock  lists  of  the  I'nited  Steel  Corporation  which  were 
opem-d  lor  inspection  at  the  animal  meeting  of  the  stockholders, 
in  Hoboken.  X.  ]..  on  April  18,  1910,  showed  that  the  name  of 
].  P.  Morgan  and  Company,  for  the  firm  and  as  holders  for 
others,  appeared  on  the  lists  for  large  amounts  of  stock.  Mor- 
gan's London  house,  formerly  known  as  ].  S.  Morgan  and  Com- 
pany, but  at  present  Morgan,  Grenfell  and  Company,  also  held, 
it  was  revealed,  large  amounts  of  stock.  The  holdings  in  the 
name  of  Luke  II .  Cutler,  amounting  to  17-395  shares,  were  gen- 
erally considered  to  be  stock  owned  by  John  D.  Rockefeller. 
Of  the  foreign  stockholders,  the  "  Dutch  Syndicate "  was  shown 
to  be  the  largest,  its  holdings  reaching  216.870  shares  of  common 
stock.  The  Rothchilds  were'  also  disclosed  as  large  stockholders. 
A  considerable  number  of  conspicuous  American  individual  cap- 
italists and  banking  firms  were  entered  on  the  books  as  stock- 
holders in  varying  degrees  of  ownership,  large  and  small. 


CHAPTER  XII 
MORGAN  AS  "THE  SAVIOR  OF  THE  NATION" 

All  previous  panegyrics  lavished  upon  Morgan  became 
stale  and  inadequate  compared  to  the  apotheosis  of  him 
during  the  panic  of  1907.  What  climax  of  earthly  splen- 
dor does  Morgan  reach?  He  becomes  the  "Savior  of 
the  Nation." 

Around  their  genesis,  methods  and  characters,  the 
magnates  weave  romantic  yarns.  They  supply  the  in- 
spiration ;  a  host  of  writers  and  orators,  trained  to  trans- 
fer that  romancing  into  catchwords  and  phrases,  carry 
it  to  the  people  and  popularize  it  until  it  becomes  an  al- 
most adamantine  tradition.  Always  it  is  the  same 
species  of  romance  ;  the  toil,  the  thrift,  the  integrity,  the 
wonderful  ability  by  which  the  magnates  reaped  their 
fortunes ;  their  heroism  in  time  of  war,  their  saving 
philanthropy  in  all  great  crises. 

The  audacity  of  these  "  literary  "  puffers  is  as  great 
as  the  imposture  of  the  magnates  whom  they  cover  with 
adulation.  In  the  very  commission  of  vast  frauds  and 
thefts,  the  magnates  will  pose  as  public-spirited,  patriotic 
men.  Their  puffer>  hasten  to  paint  them  likewise. 
There  is  no  judicious  waiting  until  time  has  receded,  and 
the  actual  facts  are  more  or  less  forgotten.  The  very 
enormities  of  the  magnates  are  at  once  transformed  into 
acts  of  the  greatest  purity,  and  the  people  are  called  upon 
t<>  applaud.  In  every  conceivable  manner  the  press,  or  at 

287 


288         HISTORY    OF    'I' III-:    GttKAT    AMF.R1CAX     FORTUNES 

lea-t  a  considerable  section  of  it,  is  manipulated  to  coun- 
teract the  effect  of  disclosures. 

A    CIIARACTFRISTIC    EL' LOGY    OF    MORGAN. 

Shortly  after  the  panic  of  1907  had  set  in,  an  article 
(and  it  was  one  of  many  such  productions)  entitled 
"  Morgan  the  Magnificent"  was  published  in  a  "popu- 
lar magazine."  Its  bombastic  style,  if  nothing  else, 
must  provoke  a  wondering  interest,  yet  it  was  strictly 
in  accord  with  the  quality  of  most  of  the  matter  pub- 
lished in  books  ant]  magazines.  This  trash  was  called 
"  popular  "  not  because  the  people  wanted  it,  but  because 
to  a  great  extent  many  publishers  considered  it  "  safe." 
It  did  not  antagonize  the  vested  interests  of  wealth.  The 
article  began  with  this  lurid  introduction  : 

There  were  scenes  in  the  saving  of  Wall  street  by  John 
Pierpont  Morgan  that  never  can  be  written  ;  things  said  and 
done  that  cannot  and  should  not  even  be  remembered,  even  in 
those  days,  of  excitement,  horror  and  confusion:  heroism,  crimes, 
blunders,  treacheries  and  martyrdoms  that  spanned  the  whole 
capacity  of  man  for  glory  or  shame;  for.  until  the  continent 
came,  half-crying,  half-cursing  out  of  the  trembling  madness 
that  threatened  to  bring  down  the  banking  system  of  the  coun- 
try into  ruins,  smash  the  credit  of  the  nation  and  smirch  its 
name,  men  were  in  a  nameless  bewilderment  of  fear  beyond 
words  to  express,  as  in  the  presence  of  some  impending  and 
irresistible  convulsion  of  nature  the  boldest  and  keenest  become 
craven  and  stupid. 

Plain  Mr.  Morgan,  fresh  from  the  dronings  of  a  great  Epis- 
copal church  convention  at  Richmond,  was  suddenly  aroused  by 
tin-  peril  of  the  financial  situation  to  a  demonstration  of  c<>ur- 
age.  -tn-n.uth  and  personal  masterfulness  that  brought  order  and 
confidence  nut  of  chaos  and  de-pair. 

\nd  there  is  a  little  history  to  compare  to  the  sight  of  this 
-tout,  Decretive  American  banker  nf  seventy  years  withdrawing 


MORGAN*    AS    "  THE    XATIOX's    SAVIOR  "  28*) 

from  the  passionless  company  of  bishops  and  ministers  intent 
on  religious  ideals,  to  take  command  of  the  fierce,  clashing 
money  forces  of  Wall  street,  gone  craxy  out  of  sheer  fright  — 
to  become  the  protagonist  and  hero  of  the  most  cynical,  sus- 
picious, treacherous,  cruel,  arrogant  and  cowardly  human  ele- 
ments in  the  world. 

It  might  well  be  imagined  that  Morgan,  the  "  connois- 
seur of  art,"  the  "  lover  of  literature,"  the  great  arbiter 
clegantarium,  would  have  sent  for  the  author  of  this 
perpetration  and  caused  him  to  be  the  bastinadoed  on  the 
spot.  Evidently  —  in  the  absence  of  proof  to  the  con- 
trary —  Morgan  was  pleased  with  the  confection.  It 
would  not  be  worth  notice  here  were  it  not  for  the  fact 
that  the  point  of  it  —  that  Morgan  was  the  "  Savior  of 
the  Nation  "•  —  was  gravely  and  repeatedly  pressed  for- 
ward by  many  other  writers  and  publications. 

In  scrutinizing  Morgan's  career,  one  prodigious  vir- 
tue is  encountered.  It  is  that  of  consistency.  The  qual- 
ity of  his  patriotism  and  heroism  never  changed  from  the 
time  of  his  introduction  into  business.  That  rille  sale 
at  the  outbreak  of  the  Civil  War  was  the  first  exhibition 
of  his  intense  patriotism.  In  1894  his  patriotic  nature 
was  again  displayed  consistently  when  he  and  his  clique 
squeezed  a  profit  of  $18,000,000  or  more  from  the  ( lov- 
ernment  in  a  time  of  need.  In  the  panic  of  i<;o/  his 
never-failing  patriotism  was  even  more  prominently 
shown. 

While  the  effusions  of  the  "  popular  writers  "  were 
wending  the  rounds  of  the  country,  a  recalcitrant  L'nited 
States  Senator  was  boring  the  august  Senate  of  the 
{ nited  States  with  a  long,  tiresome  speech.  The  bulk 
of  the  august  Senate  did  not  care  to  hear  what  this  Sen- 
ator, one  La  Toilette,  of  Wisconsin,  had  to  say,  but  were 
compelled  to  by  the  rule-.  The  Senate  of  the  United 


290      ms'iORY  or  THK  <;RK.\T  AMKKICAX   KORTL'XH.-, 

Slates  was  most  sen-itively  jealous  of  its  prestige  and 
dignity.  Most  of  its  members  were  multimillionaires. 
La  Follelte  lacked  that  highly  important  qualification. 
Still  more,  he  was  painfully  deficient  in  ca.ste  in  another 
respect.  He  had  not  bought  his  way  into  the  Senate  of 
the  United  States,  thereby  outraging  one  of  its  most 
sacred  canons.  Hence  he  could  give  no  real  test  of 
standing  or  any  guarantee  of  wise,  conservative  states- 
manship. 

But  the  majority  of  his  colleagues  had  good  reason 
to  be  impatient  of  La  Follette's  speech.  Ilis  was  a  voice 
from  the  past.  They  represented  the  newer  order,  that 
of  centralized  industry,  and  a  Government  run  directly 
by  the  magnates  themselves.  He  was  a  relic  of  the  old 
creed,  that  of  the  age  of  competition  in  industry. 

For  four  long  days,  on  March  17.  19,  24  and  29,  1908, 
he  delivered  his  lugubrious  wail.  "  In  their  strife  for 
more  money,  more  power  —  more  power,  more  money," 
he  explained  in  describing  the  great  magnates,  "  there 
is  no  time  for  thought,  for  reflection.  Government, 
society  and  the  individual  are  swallowed  up  in  the  strug- 
gle for  greater  control.''  Thus  he  stumbled  through 
mazes  of  facts  the  purport  and  interpretation  of  which 
he  did  not  understand.  X'either  did  he  comprehend  the 
fundamental  fact  that  commercial  upheaval-  are  not  the 
work  of  individual-,  but  of  the  whole  capitalist  system  ; 
that  certain  powerful  individual.-,  or  interests  could  ac- 
celerate or  retard  them,  but  could  not  be  held  responsible 
tor  their  causation.  According  to  him,  a  crowd  of  con- 
-pirators,  headed  bv  the  Standard  Oil  Company  and 
Morgan  had  deliberately  brought  on  the  panic:  he  ful- 
minated against  them  and  denounced  them  as  arch  crim- 
inals. 

Amid    his    accusations,    lamentations    and    platitudes. 


MORGAN   AS  "  TIII-:  NATION  s  SAVIOR  29 ; 

Senator  La  Folk-tie  embodied  certain  facts  of  real  his- 
toric value  —  facts  confirmed  by  the  records  of  what 
actually  took  place,  and  familiar  to  all  close  observers 
of  events  during  the  panic. 

The  panic  of  1907,  like  previous  panics,  supplied  the 
propitious  opportunity  to  the  great  magnates  to  crush 
out  lesser  magnates  and  seize  the  control  of  their  prop- 
erty. 

The  requirements  of  industrial  centralization  de- 
manded the  effacement  of  certain  minor  magnate  groups 
which,  from  the  point  of  view  of  the  great  magnates,  had 
possessed  themselves  of  a  rather  dangerous  degree  of 
industrial  and  financial  power.  These  ambitious  little 
magnates  had  imitated  the  methods  of  the  great ;  they  had 
combined  fraudulent  financial  manipulation  with  the  op- 
pressive exercise  of  political  power,  and  thereby  had 
tricked  or  forced  out  the  owners  of  various  properties, 
and  had  then  vested  the  ownership  of  those  properties 
in  themselves.  The  form  was  the  usual  one  of  organiz- 
ing large  corporations,  with  immense  amounts  of  wa- 
tered stock.  These  corporations  were  built  upon  the 
ruin,  extinguishment  or  buying  owt  of  numbers  of  former 
independent  business  men. 


One  of  these  minor  capitalist  cliques  was  what  \va- 
called  the  "  F  leinze-AIorse-Thoma-  Group."  IT.-  control 
comprised  twelve  banks  and  two  trust  companies ;  a 
coastwise  steamship  company,  consolidated  by  the  inclu- 
sion of  a  number  of  steamship  companies;  large  copper 
mine-,  a  trust  in  ice,  and  various  other  properties.  Tin- 
control  of  some  of  the>e  propcrtic-  \va-  largely  secured 
by  means  of  the  enormous  profit-  robbed  from  the  poor 


:  STORY  or  THK  GREAT  AMERICAN  FORTUNES 

ana  this  robbery  was 
of  a  corrupt  alliance 
between  Moi>e  and  tin:  Tammany  administration  in  Xe\v 
York  City. 

Before  organizing  the  Ice  Trust,  Morse  had  been  an 
inconspicuous  banker.  In  the  course  of  this  business, 
he  had  dealings  in  discounting  the  notes  of  various  in- 
dividuals and  firms  engaged  in  the  selling  of  ice.  Con- 
ceiving the  idea  of  forming  a  trust  in  that  necessity,  he 
set  about  to  crush  out  the  small  dealers.  One  of  hi> 
first  steps  was  to  assure  himself  of  the  collusion  of 
powerful  politicians  ruling  the  government  of  Xew  York 
City. 

In  its  investigation  of  the  administration  of  Xew  York 
City,  the  "  Mazet  Committee ''-  —  an  investigating  body 
appointed  by  the  Legi^aturc  in  i8</j  —  exposed  the  con- 
spiracy between  the  ice  Tm:-t,  on  the  one  hand,  and,  on 
the  other,  the  Dor!;  and  other  municipal  departments,  to 
create  and  maintain  a  monopoly  of  Xe\v  York's  ice  sup- 
ply. Mayor  Van  \Yyck,  a  puppet  of  the  big  Tammany 
leaders,  subsequently  admitted  in  his  testimony,  before 
Judge  Cuiynor,  of  the  Xew  York  Supreme  Court,  that 
he  had  obtained  five  thousand  shares,  worth  $500.000. 
of  Ice  Trust  stock,  tie  alleged  that  he  had  paid  857,000 
in  cash  for  them.  I'res-ed  for  proof  to  substantiate  his 
statement,  he  failed  to  prove  that  he  had  actually  paid 
anything.  The  testimony  lie  fore  the  "  Mazet  Commit- 
•'•-"  conclusively  showed  that  the  corrupt  arrangement 
between  the  Ice  Trust  and  the  city  officials  was  such  as 
to  compel  the  people  to  pav  .-ixty  cent--  a  hundred  pounds. 
and  that  the  trust  had  stopped  the  ^ale  of  five-cent  pieces 
<>f  ice.  practically  cutting  off  the  supply  of  the  very  poor.- 

-  Sec-  "  Tin.-  Hi.-tory  of  Tammany  Hall." 


YVuii  .is  assured  monopoly,  the  Ice  Trust  declined  to 
L,.<ake  the  slightest  concession. 


MILLIONS-   FROM    SUFFERING,    DISEASE    AND   DEATH. 

The  result  \vas  a  noticeably  great  increase  in  the  rate 
of  mortality  among  the  children  of  the  poor.  Large 
numbers  of  families,  living  on  the  most  precarious  edge 

of  destitution,  could  not  afford  to  pav  the  extra  five  cents 
demanded  for  a  piece  of  ice.  The  milk  soured  and  acted 
like  poison  on  the  children.  The  increasing  number  of 
deaths  in  successive  summers  when  the  terrific  heat  made 
ice  an  absolute  necessity,  especially  in  the  congested  tene- 
ments, could  be  traced,  in  large  part,  to  the  methods  of 
the  Ice  Trust.  Millions  of  other  people  who  could  ill  af- 
ford to  pay  the  exactions  demanded  were  compelled  to 
give  up  extra  tribute  or  go  without  ice. 

This  was  not  a  temporary  condition  ;  it  has  continued 
so  ever  since  the  organization  of  the  Ice  Trust :  the 
methods  then  adopted  prevail  now.  Xeither  were  the 
methods  any  different  from  those  of  capitalism  in  every 
field.  The  invariable  principle  upon  which  capitalist- 
acted,  and  bv  which  they  tremendously  augmented  their 
profits.  wa-  to  sell  necessities  at  the  verv  highest  prkv 
when  the  people  needed  them  most.  In  the  depths  of 
winter  the  price  of  coal  \vas  always  raised  to  an  ex- 
orbitant point.  While  giving  hi-  bits  ot  donations  for 
the  founding  of  hospitals,  the  succe-sful  capitali-t  reaped 
his  million-  from  condition-  productive  of  vast  suffering 
and  disease  on  every  hand. 

The  more  profit-  that  he  made,  the  more  of  a  financial 
genius  he  was  accounted  by  ins  class,  and  bv  all  \vho 
were  influenced  bv  the  -tandanl-  of  that  class.  As  soon 


294        HISTORY    OF    THE    GREAT    AMERICAN*    FORTUNES 

as  Morse  proved  that  he  could  exact  immense  profits,  he 
was  hailed  as  a  very  foremost  and  successful  capitalist. 
The  newspapers  began  giving  extended  notices  of  him, 
the  price  of  Ice  Trust  -lock  went  up  in  Wall  street,  and 
fine  men  and  women  in  elegant  society  were  only  too 
eager  to  get  hold  of  stock  paying  such  rich  dividends. 
True,  charges  of  violating  the  law  were  made  against 
Morse  and  his  associates,  but  those  charges  were  not 
based  upon  any  concern  for  the  mass  of  people,  nor  upon 
any  indignation  at  the  privations,  suffering  and  deaths 
caused  by  the  method-  of  the  Ice  Trust ;  they  were  made 
solely  on  behalf  of  the  smaller  firms  whom  Morse  had 
forced  out  of  business.  Jerome,  for  some  years  Dis- 
trict Attorney  for  Xew  York  County,  could  discover  no 
criminality  in  any  of  Morse's  methods,  and  caused  crim- 
inal proceedings  brought  against  the  Ice  Trust  officials 
to  be  di.-mi-sed.  A  suit,  however,  brought  by  the  At- 
torney (j'cneral  of  Xew  York  State  against  the  Ice  Trust 
for  violation  of  the  State  anti-monopoly  act  is  now  pend- 
ing. 

From  tin-  process  of  exaction  and  indirect  murder  on 
a  great  scale,  the  Ice  Trust's  profits  became  very  great. 
The  money  thus  taken  in.  Morse  used  to  finance  other 
enterprises.  II  try  ing  up  the  control  of  a  number  of 
coastwise  -team.-hip  line-,  he  consolidated  them  into 
one  corporation,  with  the  familiar  accompaniments  of 
-tock  watering  and  juggling.  He  allied  himself  with  the 
1 leinze-  who  owned  large  c<>pper  mines  in  Montana,  and 
who.-e  manipulation  of  the  politic-  and  politicians  of  that 
State  \vas  somewhat  similar  to  that  Morse  used  in  Xew 
York  City.  Also,  he  made  a  coalition  with  Thomas,  who 
controlled  some  Xew  York  bank-. 

(  'ii  the  -urface  this  seemed  a  very  powerful  combina- 
tion :  not  an  opportunity  was  lost  by  Mor-e  and  his  as^o- 


MORGAN    AS    ''  THE    NATION'S    SAVIOR  "  2Q5 

ciates  to   spread   abroad  the   impression   that  they   were 
too  formidable  to  be  overthrown. 


THE    GREAT    MAGNATES    LIE    IN    AMP.USH. 

These  men  made  much  noise  in  the  financial  world, 
and  dashed  around  with  prodigious  belief  in  their  in- 
vincibility. The}-  were  vaunted  as  great  financiers ; 
doubtless  inflated  bv  their  own  success,  they  esteemed 
themselves  so.  and  judged  themselves  fully  able  to  cope 
with  the  great  magnates.  In  the  meantime,  the  Morgan 
and  Rockefeller  group  was  carefully  observing  their  op- 
erations, and  awaiting  the  ripe  time  when  they  could  be 
crushed  out  at  one  blow.  The  Standard  Oil  Company 
wanted  those  copper  mines,  and  the  steamship  company 
organized  by  Morse  was  considered  a  competitive  menace 
to  railroad  lines  controlled  by  the  Morgan  and  Rocke- 
feller interests. 

Senator  La  toilette's  account  of  events  that  followed 
was  accurate  as  to  the  facts.  In  his  speech  in  the  I  nited 
States  Senate  he  gave  this  narrative  : 

Suddenly,  in  the  rir-t  day>  of  October,  somebody  (to  use  a 
Wall  street  phrase)  began  ID  "smash  I'nited  Copper  on  the 
curb."  The  stock  broke  badly.  Standard  Oil  \vas  getting  under 
way.  Doubtless,  never  -u>pectmg  the  source,  lleiuxe,  thr  >ugh 
his  brother,  a  member  ot  the  Stock  Exchange,  and  through 
brokers,  bought  and  bought  until  Unittd  Copper  went  ou<  of 
>iglu.  carrying  d'i\vn  ileinxeV  brother,  *  >ne  firm  of  his  broker-, 
and  involving  the  MorsoHein/.e  banks  in  the  crash. 

Up  to  this  point  the  panic  had  been  well  in  hand,  but  with 
the  revelations  following  hard  upon  clearing  house  investiga- 
tion:-, it  Clipped  u-  bridle,  and  the  situation  assumed  a  <erioti< 
aspect.  I'm  not  for  one  moment  did  Morgan  or  Standard  Oil 
miss  tlii'  o|ip.iruimiv  ottered.  Mor-e  and  llein/e  were  forced 
out.  Thev  were  compelled  to  reorgani/e  their  directorships,  and 
substitute  ^'mi-dependent  Standard  Oii  men  as  their  successors. 


296        HISTORY    OF    T1IK    GlUiAT    AMERICAN    FORTFXKS 

They  were  forced  to  sell  their  stocks  tor  what  they  could  get. 
Morgan  attacked  Morse's  Consolidated  Steamship  Company 
slocks  and  bonds  vd  Morse  was  ultimately  forced  to  surrender 
his  steamship  con^any  combine,  which  he  did. 

They  went  after  the  Knickerbocker  Trust  Company,  Charles 
T.  Barney,  president,  and  close  ally  of  Morse's.  It  was  charged 
in  Xew  York  that  the  interests  deliberately  started  a  run  on 
the  Knickerbocker.  Morgan  was  appealed  to  for  aid.  Morgan. 
whose  plaudits  have  been  sounded  right  here  in  this  Chamber, 
was  in  a  position  to  follow  carefully  every  step  and  pha^e  of 
this  proceeding.  In  the  first  place,  Morgan  gave  out,  as  re- 
ported in  Wall  street,  that  the  Knickerbocker  would  be  supported 
if  it  met  the  demands  of  the  depositors  who  had  started  a 
run  upon  it.  There  was  nothing  in  subsequent  events  to  indicate 
that  there  was  any  sincerity  in  that  promise,  but  an  analysis  of 
every  step  is  convincing  to  the  contrary.  Support  was  not  given  : 
it  was  withheld.  After  the  company,  relying  upon  that  pledge, 
had  paid  out  millions,  it  was  forced  to  close  its  doors,  and  Barney 
went  to  a  suicide's  grave. 

Barney  was  likewise  a  director  in  the  Trust  Company  of 
America,  a  comparatively  new  institution,  with  a  few  System 
directors,  giving  the  great  groups  a  semi-interest  in  the  institu- 
tion, though  they  have  not  yet  taken  it  over.  The  raid  of 
Hcinze,  Morse,  Barney  ct  a!.,  and  the  latter's  directorate  con- 
nections with  tlie  Trust  Company  of  America,  caused  public 
suspicion  to  fall  upon  it.  A  strong  run  was  started.  This  was 
not  on  the  program,  but  as  the  Vanderbilts,  allies  of  the  Stand- 
ard Oi],  were  represented  on  the  directorate  of  the  Trust  Com- 
paiiv  oi'  America,  Standard  Oil  wa  -  bound  to  offer  some  a>si.-t- 
ai.ee.  Though  gold  and  bank  notes  were  ostentatiously  piled  on 
the  counters  to  impress  depositors,  ;,:id  young  Vanderhilt  offered 
as  an  exhibit  of  resources  and  placid  at  the  teller'-  window,  the 
excited  depositors  persisted  in  demanding  their  money. :; 


!n  a  dav,  as  it  vrcro,  the  Morse-Heinze- 1  homa 


mashed  into  nothingness,  and  its  p'ropertie 


f    Control     in     Industry. 


Phe  Panic  of  October. 


Speech   of  lion.   Robert  M.   La    Follettc 


MOKC.AX  AS  "THE  NATION'S  SAVIOR"  297 

had  ended  there,  they  would  have  had  cause  to  rejoice 
over  their  good  fortune.  But  their  rout  had  to  be  made 
complete.  The  Federal  authorities  began  to  take  a  sud- 
den interest  in  their  operations.  Where  previously  the 
(Government's  prosecuting  officials  had  been  wholly  un- 
aware that  Morse,  Heinze  and  Thomas  had  been  commit- 
ting fraud  in  their  financial  methods,  they  now  spied  out 
the  'fullest  evidences.  From  certain  quarters  proofs  were 
offered  of  violations  of  the  law  by  the  fallen  trio.  The 
I  nited  States  District  Attorney's  office  in  New  York- 
City  became  alive  with  energy.  It  caused  grand  jurors 
to  investigate,  and  showed  striking  official  zeal  in  the 
prosecution.  1  leinze  was  indicted,  and  Morse  brought 
to  trial,  convicted,  and  sentenced  to  fifteen  years  in 
prison  —  a  verdict  from  which  he  appealed.  The  United 
States  Circuit  Court  of  Appeals  affirmed  the  verdict,'4 
and  A  Torse  is  now  serving  his  term  in  the  Federal  prison 
at  Atlanta. 

Morse  and  Heinze  learned  two  valuable  lessons  which 
all  aspiring  little  magnates  might  well  take  to  heart  : 
First,  that  it  is  extremely  unwise  to  cross  the  interest 
of  the  really  big  magnates;  and,  second,  that  those  mag- 
nates can  use  the  criminal  machinery  of  the  courts  against 
opponents  of  their  own  class,  not  less  than  against  labor 
leaders,  labor  unions  and  the  propertiless  in  general. 

Hut  the  grasping  of  the  properties  of  the  ousted  com- 
bination were  not  the  only  seizures  during  those  harvest 

4  During  hi?  commitment  in  the  Xe\v  York  oily  prison  the 
United  State-  judges  allowed  him  to  fro  out  every  day  in  order 
"  that  he  mi.^ht  attend  to  necessary  business."  Of  the  va-t  num- 
ber ot  persons  convicted  of  crime,  pot  a  siiudc  in-tapce  has  ever 
been  known  ot  a  poor  prisoner  being  a!'  >wcd  to  leave  prison 
during  the  day  so  that  he  miyln  work  for  hi-  family.  The  conn 
•  -;'  d  !;;!<"'  that  Mor^c  could  >•:  •  free  under  hail  ['ending  the 
d  cision  of  his  appeal.  X<>  poor  pri-oner  \vas  allnued  this  priv- 


298 

day-  of  the  panic  of  1907.  The  electric  apparatus  fac- 
tories of  the  Westinghouse  Company  had  long  been  in 
the  way  of  the  Standard  Oil  Company,  which  owned 
tiie  (Jeneral  Electric  Company.  The  Standard  Oil  Com- 
pany exercised  a  financial  pressure  during  the  panic  that 
soon  drove  the  Westinghouse  Company  into  an  extrica- 
tion, from  which  it  escaped  only  by  becoming  a  Standard 
Oil  property.  And,  in  the  conferences  held  by  the  Wall 
street  financiers  during  the  early  days  of  the  panic.  Mor- 
gan learned  that  the  control  of  the  Tennessee  Coal  and 
Iron  Company,  in  the  form  of  stock,  had  been  placed 
with  the  Tru-t  Company  of  America  by  John  W.  <  iates 
and  hi-  associates  to  secure  loans.  This  was  informa- 
tion of  the  highest  and  most  momentous  value. 

TIIK    STF.EL    TKl'S/f    AJiSOKHS    A    DAXGEROl'S    COMPETITOR. 

The  Tennessee  Coal  and  Iron  Company  was  the  mo-t 
dangerous  competitor  of  the  Steel  Trust.  It  was  the 
one  great  competitor  having  it-  own  sources  of  iron  ore 
and  coal  supply.  In  the  fall  of  1907  it  owned,  it  was 
estimated,  from  500.000,000  to  700,000,000  tons  of  iron 
ore,  2.000.000.000  tons  of  coal,  and  "  very  large  quanti- 
ties of  flux  and  fluxing  material."  All  of  these  coal  dc- 
posits  were  within  a  radius  of  thirty  miles  of  its  plant  in 
Birmingham,  Ala/'  The  owners  of  this  companv  were 
planning  improvements  which  would  have  made  it  an 
-  ven  more  serious  competitor  of  the  Steel  Tru-t,  and 
thev  had  plans  under  way  of  merging  the  Republic  Steel 
Company  with  their  corporation.  Moreover,  the  Ten- 
nessee Coal  and  Iron  Company  was  foremost  in  the 
developmenl  of  the  open  hearth  -ystcm  of  making  steel 

cs    Senate    ("ommittee    -  <n 


rails.  Its  rails  were  in  greater  demand,  and  brought 
higher  price-,  than  those  of  the  Steel  Trust. 

In  the  difficult  financial  position  of  the  Trust  Company 
of  America,  the  Morgan  and  Rockefeller  interests,  work- 
ing in  unison,  saw  their  great  opportunity  of  eliminating 
the  competition  of  the  Tennessee  Coal  and  Iron  Com- 
pany. To  prevent  itself  going  into  bankruptcy,  the 
Trust  Company  of  America  needed  large  and  immediate 
amounts  of  cash,  which  was  scarce.  Morgan  and  his 
clique  had  the  cash.  The  condition  insisted  upon  by 
Morgan  was  that  the  company  should  sell  him  the  stock 
of  the  Tenne.-sec  Coal  and  Iron  Company  that  it  was 
holding  as  collateral  for  loans.  Hard  pressed,  the  Trust 
Company  had  to  yield,  and  sell  the  stock  at  the  low  price 
offered.  The  next  move  was  to  make  the  Tennessee 
Coal  and  Iron  Company  a  part  of  the  Steel  Trust. 

There  was,  however,  an  ob.-tacle.  The  Federal  anti- 
trust law  prohibited  such  combinations.  How  could  this 
situation  be  overcome?  President  Roosevelt  was  inces- 
santly and  gustilv  threatening  the  great  magnates  with 
the  enforcement  of  this  law.  Hut  apparently  Morgan 
knew  Roo-eveh  much  better  than  the  country  knew  him. 
He  undoubtedly  reckoned  that  Roosevelt's  talk  was  mere 
words,  and  that  Roosevelt  would  prove  hi.-  subservience 
anew  in  acts. 

The  report  went  that  Morgan,  through  emissaries  sent 
to  the  YV3  '  sc,  informed  Roosevelt  that  unle»  the 

merger  of  the  two  steel  companies  wa-  all<>\ved  by  the 
Government,  the  Trust  Company  of  America  would  go 
down  in  failure,  cau-ing  a  train  oJ  other  bankruptcies, 
and  the  panic  would  be  manifold  intensified.  Whatever 
were  the  reason^  for  Roosevelt's  submission,  he  gave  his 
consent.  At  that  very  time  the  courts  were  enforcing 
the  anti-trusl  law  with  a  construction  that  no  one  had 


3OO        HISTORY    OF    THE    GREAT    AMERICAN    FORTUNES 

dreamed  of  when  the  law  was  passed.  The  eminent 
judges  discovered  that  labor  unions  were  trusts,  and 
issued  writs  against  them  on  the  ground  that  they  were 
conspiracies  in  defiance  of  that  law !  Roosevelt  was  bit- 
terly denounced ; 6  his  action,  however,  mattered  little  so 
far  as  the  merging  of  the  two  corporations  was  con- 
cerned ;  had  not  the  Steel  Trust  obtained  control  at  that 
particular  time  it  would  have  inevitably  done  so  at  some 
other  time,  and  by  another  process.7  According  to  dis- 
closures before  the  Senate  Committee  on  Judiciary,  the 
Steel  Trust  made  a  profit  of  $670.000,000  by  forcing  the 

0  Seven  United  States  Senators  signed  a  document  severely 
arraigning  him  for  sanctioning  a  violation  of  the  anti-trust  law 
and  for  practically  commanding  the  United  States  Department 
of  Justice  to  take  no  steps  for  an  enforcement  of  the  law. 

Under  the  caption  of  "  Morgan,  Dictator,''  the  Berlin  Tagc- 
blatt,  on  December  3,  1907.  publi-hed  a  leading  article  on  it- 
financial  page,  urging  the  prosecution  of  Morgan  for  blackmail 
in  threatening  a  more  disa>trous  calamity  in  case  Roo-evelt  did 
not  accede.  Under  the  German  laws,  said  the  Tageblatt,  Mor- 
gan would  have  been  immediately  arrested  for  blackmail.  An 
amusing  comment,  considering  that  Morgan  and  his  kind  are  the 
Government  in  the  United  States. 

~  The  futihy  of  the  anti-trust  law.  so  far  as  it  is  applied  to 
capitalist  corporations  was  mockingly  shown  by  Congressman 
Littlefield.  one  of  the  Republican  dictators  of  Congress  and  a 
trust  advocate  of  great  skill.  In  an  address  to  the  Illinois  Bar 
Association  on  June  27,  1008,  he  pointed  out: 

"  In  1907  the  Government  had  in  its  service  one  hundred  and 
seventy-one  District  and  Assistant  District  Attorneys.  This  lit- 
tle army  of  lawyers  cost  the  Government  in  salaries  and  ex- 
penses  $735.612.06,  in  addition  to  the  salaries  of  the  Department 
of  Ju.-tice,  amounting  to  $270.965.58.  By  the  exercise  of  du-- 
diligence  they  obtained  9.741  convictions  for  violation  of  the  law. 
The  average  number  of  convictions  for  violation  of  the  Sherman 
Anti-Trust  law  during  the  la^t  six  and  one-half  year-  is  a  little 
more  than  one  a  year,  only  ^even  since  September  14.  [<«4. 

"  In   order  to  get  the   full   signiiicap.ee  of  this  record   it    should 

lie   borne    in   mind   that    during   this   period   the   Government   ha- 

had  available  for  it-  us*,    for  tin-  enforcement  of  tin-   special  stat- 

i   ::-    •  '••  (.   and   $;>50.ooo   m    K;oN.     Siixe   SepKmber    i  .'. 

,   ' .  •   iih  i  i'i';!   injunctions.  ;:; id  -i.  ven  c   nviction-;.  S3Sn.24J.^ 

:    '.-    I    ior  this  spe  'i;.i  purpose,  i\-u'iii  L;  ;:i  fines  of  o;    , 
>' ,'  .<"»  10." 


Trust  Company  of  America  to  sell  the  control  of  the 
enormously  valuable  plants  and  mines  of  the  Tennessee 
Coal  and  iron  Company  at  a  preposterously  low  price. 

Where  did  Morgan  and  his  associates  get  the  money 
with  which  to  carry  on  the  process  of  terrorizing  the 
country  and  gathering  in  immense  industrial  and  other 
properties?  Again,  the  people  had  another  of  those 
frequently  occurring  vivid  opportunities  of  seeing  how 
thoroughly  the  United  States  Government  was  an  instru- 
ment of  the  capitalists.  In  the  banks  there  were  more 
than  two  hundred  million  dollars  of  money  wrung  funda- 
mentally from  the  sweat  of  the  working  class  in  taxa- 
tion. The  few  oligarchs  controlling  the  great  banks 
were  allowed  to  use  this  money  as  though  it  were  their 
private  property.  They  declined  to  loan  any  money  to 
anyone  until  their  plans  were  ready,  and  when  they  did 
loan,  it  was  at  extortionate  rates  of  interest.  Even  this 
complete  transference  of  Government  funds  did  not  sat- 
isfy them ;  they  demanded  more.  The  Government  at 
once  responded.  Cortelyou,  Secretary  of  the  Treasury, 
instantly  permitted  the  national  banks  to  issue  thirty 
million  dollars  more  in  paper  currency,  and  made  the 
mints  work  night  and  day  to  turn  out  fresh  coin. 

Posing  as  the  savior  of  the  country.  .Morgan  came  for- 
ward at  the  auspicious  time,  on  the  afternoon,  of  Oc- 
tober 24.  1907.  and  magnanimously  announced  his  de- 
>ire  to  "  relieve  the  tension."  The  entire  capitalist  class, 
excepting  the  very  few  magnates  thus  engineering  the 
whole  situation,  was  clamoring  for  loans  of  money.  The 
loans  were  finally  given  on  that  afternoon.  The  "  savior 
of  the  country  "  demanded  from  twenty  per  cent,  up- 
wards for  loan-,  and  exacted  securities  as  collateral  at 
neavy  sacrifices  to  the  borrowers.  The  money  that  he 
thus  loaned  was  Government  money,  squeezed  in  taxa- 


302        HISTORY    OF    THE    GREAT    AMERICAN    FORTUNES 

tion   from  the  producers.     It   was  a   classic   example  of 
Government  of,  for  and  by  the  great  capitalists. 

XO    AID    FOR    THE    UNEMPLOYED. 

While  the  Government  was  placing  the  treasury  of 
the  United  States  at  the  disposal  of  Morgan,  what  was 
it  doing  for  the  millions  of  workers  thrown  into  enforced 
idleness  and  destitution  ?  By  June,  1908,  it  was  conserva- 
tively estimated  that  perhaps  five  million  workers  in  the 
L'nited  States  were  out  of  work,  and  could  get  none. 
Reports  from  the  charity  organizations  in  every  city 
showed  that  the  cities  were  overcrowded  with,  the  home- 
less and  unemployed.  Destitution  was  rife,  and  cases 
of  starvation  of  men.  women  and  children,  were  more 
frequent  than  the  official  reports  dared  reveal.  The 
jails  throughout  the  country  were  crowded  with  men 
who,  thrown  out  of  work,  were  adjudged  vagrants  and 
sentenced.  Many  of  the  homeless  voluntarily  committed 
some  breach  of  the  law  in  order  to  be  sent  to  jail. 
There,  at  least,  shelter  and  food  could  be  obtained. 
Many  towns  adopted  the  plan  of  deliberately  driving 
out  the  unemployed.  Everywhere  crime  increased ; 
driven  to  absolute  necessity,  many  workers  stole,  and, 
of  course,  were  dispatched  to  prison.  The  Social  Eth- 
ical League,  of  Xew  York  City,  reported  that  crime  had 
increased  fifty  per  cent,  within  >ix  months. 

With  destitution  and  starvation  everywhere,  what  did 
the  Government,  whether  National,  State,  or  city,  do 
for  the  unemployed?  Nothing  except  to  club  and  ter- 
rorize them  when  they  presumed  to  hold  street  meetings 
to  plead  for  the  right  to  work. 

In  the  whole  -phere  of  government  there  was  not  a 
single  real  representative  of  the  worker-  to  -peak  or  act 


MORGAN    AS    "THE    NATIONS    SAVIOR  303 

for  the  workers.  The  Government  was  a  Government 
elected  by  the  votes  of  millions  of  workingmen,  yet  the 
working  class  did  not  have  a  single  mouthpiece  in  that 
Government.  A  Senator  such  as  Davis  of  Arkansas 
might  rise,  as  he  did,  in  the  United  States  Senate  on 
December  12,  10,07,  and  fiercely  denounce  "the  stock 
gamblers  and  thieves  of  Wall  street,"  but.  lie,  and  all 
like  him,  did  not  speak  for  the  working  class,  about 
which  they  cared  nothing  save  to  keep  it  in  submission  ; 
they  spoke  for  the  middle  class  and  for  that  alone.8 

A    CAREER    STILL    IN    EVIDENCE. 

This  is  the  true  history,  in  outline,  of  the  career  of 
the  great  "  savior  of  the  country."  I'nt  it  is  not  all. 
Unquestionably  Morgan  has  been  engaged  in  a  large 
number  of  other  transactions  of  which  no  details  have 
ever  become  public.  Some  very  recent  happenings,  how- 
ever, are  tolerably  well  known.  He  and  other  Ameri- 
can bankers  were  dissatisfied  with  the  placing  of  a  $27,- 
500,000  loan  with  European  bankers,  and  insisted  upon 
the  United  States  ( iovernment  —  their  Government  — 
demanding  that  they  should  have  a  share.  Nor  is  it  so 
long  ago  that  another  transaction  of  Morgan's  became 
public.  lie  "  consented  "  to  take  a  $30.000,000  six  per 
cent,  issue  of  Xew  York  City's  bonds  in  order  "to  save 
Xew  York's  credit."  Did  he  pay  for  the-e  bonds  in 
cash?  Xay.  He  signed  a  check  for  $15.000.000  on 
the  First  Xational  Hank  of  Xew  York,  and  another  for 
$15.000.000  drawn  on  the  X~ational  City  Bank  of  Xew 
York.  Whose  monev,  virtuallv.  was  it  in  these  bank- 


304         HISTORY    OF    Til!.-:    GREAT    AMERICAN    FORTUNES 

against  which  Morgan's  checks  were  drawn?  Money 
deposited  by  the  United  States  Treasury.  In  addition, 
1'e  obtained  tens  of  millions  more  of  Xew  York  City 
bonds  at  a  high  rate  of  interest.  The  heroic  qualities  of 
the  "  savior  of  the  country  "  are  further  illumined  by 
Comptroller  Metz's  statement  that  be,  Metz,  in  order 
to  get  -Morgan  to  accept  Xew  York  City's  bonds, 
had  to  betake  himself  to  Albany,  and  get  a  special  act 
passed  by  the  Legislature  increasing  the  interest  on  the 
bonds.  Another  such  illustration  of  Morgan's  methods, 
or  those  of  corporations  controlled  by  him,  will  be  given. 

At  an  expense  of  more  than  $22,000,000  9  (reckoned  to 
November,  1909)  Xew  York  City  has  constructed  a  series 
of  extensive,  modern  piers  on  the  Hudson  River,  from 
Little  We.-t  Twelfth  street  to  Twenty-Second  street. 
These  piers  are  called  the  Chelsea  Pier  Improvements. 
The  entire  cost  has  been  defrayed  by  Xew  York  City, 
and  the  money  was  obtained  from  selling  issues  of  city 
bonds.  The  interest  rate  has  varied  from  three,  to 
nearly  five,  per  cent.  Part  of  the  bonds  are  payable  in 
thirty  years,  a  very  small  portion  in  forty  years,  and 
most  of  the  total  issue  "  matures  "  in  fifty  years. 

These  piers  have  been  leased  to  three  steamship  com- 
panies, fine  of  which  is  the  International  Mercantile 
Marine  Company,  organized  by  Morgan,  another  is  the 
Cunard  Line,  a  third  the  Compagnie  Generalc  Transat- 
lantic inc.  These  companies  secured  from  the  Tammany 
administration,  in  1904,  a  lease  of  such  a  scandalous 
character  that  the  city  docs  not  get  enough  revenue  to 
pay  even  the  interest  on  the  bonds  issued  for  the  piers. 
On  December  16,  1903,  the  International  Mercantile 
Marine  Company  offered,  in  writing,  to  take  a  lease  of 
five  full  piers  and  one  half  pier  at  an  annual  rental  of 

9  Statement  of  Xc\v  York  City  Dock  Department. 


MORC.AX    AS        THE    X. \TIOX  S    SAVIOR  -?(}-, 

*J        - 

$450,000.'°  The  question  of  awarding  this  lea:-/,?  was 
still  pending  \vhen  Tammany  came  back  into  power. 
The  International  .Mercantile  Company  then  secured  the 
return  of  its  first  offer,11  and  a  thirty-year  lease  \v 
made  later  by  which  the  three  companies  secured  ni.; 
piers  at  an  annual  rental  of  $565, ooo.1-  Inasmuch  as 
the  International  Mercantile  Marine  Company  alone  had 
originally  been  willing  to  offer  $3,392,351.46  for  the 
nine  piers  for  a  thirty-year  period,  this  chr.'ige  in  the 
terms  entailed  a  loss  to  the  city  of  nearly  three  million 
dollars.  The  result  can  be  stated  as  follows : 

The  Chelsea  improvements  have  cost  the  city  $22,- 
000,000. 

The  annual  interest  charges  that  the  city  is  required  to 
meet  are  $844,800. 

The  amortization  charges  are  $220,000. 

The  calculated  annual  depreciation  is  $345,553.50. 

The    total    annual    charges    are,    therefore,    $1,410,- 

353-50- 

The  annual  rent  received  from  steamship  companies 
for  these  piers  is  $565.000. 

Hence,   the  net  loss  per  annum  to  the  city  is  $845,- 

353-50. 

The  loss  to  the  city  per  day  is  $2.316.04. 

Thus  Xew  York  City's  officials  were  prevailed  upon  to 
lease  the  largest  and  fme-t  piers  in  Xew  York,  if  not 
in  the  United  States,  at  a  lower  rental  than  the  city  had 
been  receiving  for  older  and  far  inferior  piers,  so  that. 
Xew  York  City  loses  $845.353.50  every  year.  And  while 
Morgan's  International  Mercantile  Marine  Company  was 
profiting  by  this  transaction.  Morgan  was  giving  $20,- 


T.O6         HISTORY    OF    Till-:    GKKAT    AMERICAN    FORTUNES 

ooo  a  year  to  the  Bureau  of  Municipal  Research  to  in- 
vestigate, and  expose,  petty  graft!  Comment  is  need- 
less. 

These  transactions,  however,  are  small  compared  to 
Morgan's  still  more  recent  activities.  On  December  2, 
1909.  Morgan  personally  bought  the  majority  stock  of 
the  Equitable  Life  .Assurance  Society,  which  Thomas 
P.  Ryan,  in  1905.  had  purchased  from  the  Hyde  fam- 
ily. By  this  purchase  Morgan  acquired  the  ownership 
of  the  stock  around  which  revolved  such  a  bitter  contest 
for  possession  four  years  previously  — -  a  contest  which 
(as  already  described  >  caused  the  great  insurance  scan- 
dals and  revelations  of  1905.  By  the  purchase  of  this 
stock,  Morgan  obtained  control  of  assets  rated  at  $4/0- 
ooo.ooo :  he  paid,  it  was  reported,  approximately  $2,- 
500,000  for  Ryan's  stock.  Thirteen  days  after  this  pur- 
chase, he  bought  a  number  of  telephone  lines,  competi- 
tors of  the  Hell  Telephone  Company,  probably  to  unite 
them  with  the  Bell  system.  A  legislative  committee  in 
Ohio  has  been  investigating  charges  that  bribery  was  used 
to  pass  a  bill  allowing  this  merger. 

Morgan's  next  step  revealed  how  rapidly  he  was  ex- 
tending his  alreadv  gigantic  power.  By  purchase,  com- 
bination or  "  community  of  interest  "  he  acquired  the 
Guarantee  Trust  Company  of  Xew  York,  a  ninety-mil- 
lion dollar  concern  ;  the  Mercantile  Trust  Company,  with 
resources  of  868.475.000;  the  Equitable  Trust  Company, 
with  assets  of  $63.800,000:  the  Morton  Trust  Company 
-formerly  controlled  by  Ryan  — ;  the  Eifth  Avenue 
Trust  Company,  and  other  very  powerful  banking  insti- 
tutions. Morgan's  power  now  embraces  banking  and 
trust,  insurance,  industrial  and  transportation  companies, 
and  controls  or  influences  capital  estimated,  at  the  very 


MORGAN'    AS    "THE    NATION'S    SAVIOR"  3O/ 

least,  at  more  than  ten  billions  of  dollars.1"  How  much 
of  this  stupendous  sum  Morgan  personally  owns  or  con- 
trols, or  what  alliance  he  has  with  the  Rockefellers  or 
other  great  money  interests,  are  factors  not  definitely 
known.  After  consummating  this  Money  Trust,  he  was 
hailed  as  the  "  Money  Emperor,"  and  his  immense  pos- 
sessions were  denounced  as  an  impressive  and  ruthless 
example  of  one-man  power,  although  the  step  was,  in 
reality,  another  inevitable  hound  in  the  centralization 
and  overlordship  of  the  country's  resources.  Only  those 
blind  to  this  development  were  astonished  by  it. 

Finally,  to  end  the  narrative  of  Morgan's  career,  there 
remains  the  huge  expropriation  of  resources,  estimated 
at  a  value  of  from  $900,000,000  to  $2,000,000,000,  in 
Alaska,  and  of  vast  stretches  of  water-power  sites  in 
that  Territory,  and  in  various  of  the  Yx'estcrn  States  — 
sites  intrinsically  and  potentially  valued  at  hundreds  of 
millions,  if  not  billions,  of  dollars.  The  successful  ef- 
forts under  way  on  the  part  of  great  capitalist  interest- 
to  obtain  immense  stretches  of  coal,  copper  and  other 
mineral  land,  timber  lands  and  water-power  sites,  were 
resisted  by  Clifford  I'inchot,  I  nitcd  States  Chief  For- 
ester. A  critical  controversy  ensued,  in  1909  and  1910. 
between  Pinchot  and  Ballinger,  Secretarv  of  the  In- 
terior. Charges  were  made  that  Ballinger  had,  before 
his  prior  appointment  as  Land  Commissioner,  acted  as 
attorney  for  certain  of  the  claimants,  especially  the 
( 'unninghnms,  who  had  obtained  great  tract-  of  land 
of  the  most  valuable  resources.  A  Congressional  in- 
vestigation resulted. 

This   investigation  is  still    (at   this  writing)    going  on. 


308      HISTORY  OF  THI:  GRF.AT  AMERICAN   FORTUNES 

.Many  facts,  however,  popularly  regarded  as  startling, 
have  already  been  brought  out :  in  no  sense,  however, 
were  they  other,  at  basis,  than  a  continued  story  of  the 
fraudulent  appropriation  of  public  lands  which  has  been 
going  on  in  this  country  lor  three  centuries.  Pinchot 
and  L.  R.  Glavis,  Chief  of  the  Field  Division  of  the 
General  Land  Office  at  Seattle.  Washington,  were,  upon 
various  pretexts,  dismissed  from  office  after  they  had 
exposed,  and  vainly  sought  to  stop,  the  gigantic  land 
frauds  in  progress.14  This,  as  we  have  so  copiously  seen 
throughout  this  work,  has  been  the  fate  of  so  many  hon- 
est public  officials  obstructing  capitalist  fraud.  On 
January  28,  1910,  Glavis  testified  before  the  Joint  Com- 
mittee of  Congress  that  he  had  been  requested  by  Bal- 
linger  to  hold  up  his  investigations  of  fraud  until  after 
the  election  (of  1908).  and  that  Ballinger  supplied  secret 
information  of  the  I".  S.  Land  Office  to  the  Cunningham 
claimants,  who,  the  testimony  showed,  were  dummies 
acting  for  the  Guggenheims.15  Some  of  the  charges 

14  Of  Glavis,  Yir.  Heney.  retained  by  the  Government,  under 
Roosevelt,  to  prosecute  pnY.-erful  land  thieves  wrote  to  the 
editor  of  "Collier's  Weekly": 

"This  will  introduce  Air.  L.  R.  Glavis,  who  is  Chief  of  Field 
Division  of  the  General  Land  Office  at  Seattle,  Washington.  I 
am  in  a  position  to  know  from  experience  with  him  that  Mr 
Glavis  possesses  sterling  integrity,  as  well  as  a  high  degree  of 
practical  intelligence. 

"  He  possesses  information  in  regard  to  a  gigantic  coal-land 
swindle  in  Alaska  by  Guggenheim  and  others,  and  I  want  you 
to  know  the  facts,  so  that  you  will  be  in  a  position  to  act  when 
thp  proper  time  comes.  Mr.  Glavis  is  actuated  solely  by  a  de- 
-ire  to  prevent  this  fraud  from  being  accomplished.  He  i>  ready 
;  "I  willing  to  lose  his  position,  if  necessary." — "Collier's 
\Ve>  k'y,"  i-sue  of  February  19,  1010. 

'•"'The  assertion  was  made,  by  at  least  one  member  of  Con- 
gress, that  Rallinger's  appointment  as  Secretary  of  the  Interior 
Irid  been  brought  about  by  the  Gu:j;''--heims  in  return  for  a  brgi. 
campaign  contribution  that  they  had  made.  This  assertion  s 
far  has  not  been  proved.  It  should  al.-o  be  noted  here  that  the 
election  of  one  of  the  Guggenheims  a?  L'nited  State-;  Senn'or 


MORGAN    AS    '    THE    NATION  S    SAVIOR  3<Jy 

made  by  Glavis  were  confirmed  in  a  rather  unexpected 
manner.  It  appeared,  by  an  authoritative  statement, 
that  J.  P.  Morgan  and  Company  had  formed  a  syndicate 
with  the  Guggenheims,  in  1906,  and  that  they  had  taken 
over  the  Cunningham  claims.  On  February  18,  1910, 
John  X.  Steele,  general  counsel  of  the  syndicate,  and 
Stephen  Birch,  its  managing  director  in  Alaska,  volun- 
tarily appeared  before  the  Joint  Committee  of  Congress, 
and  made  this  statement,  also  denying  that  the  syndi- 
cate had  ever  received  money,  grants  of  land  or  special 
rights  from  the  Government.  In  its  own  defence,  the 
General  Land  Office,  on  January  26,  1910,  ostentatiously 
made  a  public  statement  evidently  intended  to  discredit 
Pinchot,  showing  that  the  most  extensive  land  frauds 
had  been  consummated  in  the  years  immediately  preced- 
ing the  Taft  administration  ;  that  within  eight  years  fifty 
thousand  acres  of  coal  lands,  valued  at  $10,000,000,  had 
been  obtained  by  fraud,10  and  that  it  was  expected  to 
recover  these  fifty  thousand  acres. 

Inasmuch  as  the  Joint  Investigating  Committee  of 
Congress  has  not  concluded  taking  testimony,  its  report 
is  not  available,  and  Ballinger's  full  defence  cannot, 
therefore,  be  given.  The  testimony  taken  thus  far,  how- 
ex  er,  has  tended  to  show  the  most  enormous  frauds  in 
either  the  successful  or  attempted  acquiring,  through 
dummies,  of  mineral,  timber  and  water-power  land-  val- 

from  Colorado  \vas  followed  by  charges  of  the  most  widespread 
corruption. 

:P;".     .     .     It   appears    fn>ni   those    report-   that   during   the   la>l 
eight   year-   coal    lands   within   the    L'nited   States   have   been   ob- 
tained  by    frand    to   the   extent   of   over   50.000  acres.     These   are 
n-ua!!y   the   very   best   ni    the   coal    lands,   and    are   to-day   \vorth 
easily  oio.ooo.ooo.      If   mined  on   a   royalty   Miflidently  IMW  to  en 
nblo   independent   operators   to   compete   with   exiting  eoal   com 
'•inations    the    returns    to    the    ( }•  'vernmcnt     would    reach     over 
>[OO.ooo.coo.     .     .     ." — Statement    of    ihe    General    Land    Office, 
January,  zb.    1910. 


31O        HISTORY    01-    THE    GREAT    AMERICAN    FORTUNES 

ued  at  hundreds  of  millions,  if  not  billions,  of  dollars, 
thus  showing  that  the  seizing  of  land,  begun  in  settlement 
times,  has  continued  through  more  than  three  centuries 
up  to  the  very  present  without  any  serious  interruption. 

Commencing  his  career  with  the  sale  of  those  con- 
demned rifles  to  the  Union  Army  during  the  Civil  \Yar, 
Morgan  has  prospered  until  he  now  towers  as  a  financial 
colossus  and  as  one  of  the  actual  rulers  of  the  land, 
lie  lives  in  a  splendid  mansion  on  Madison  avenue.  New 
York  City,  and  for  his  private  gratification  built,  ad- 
joining it,  a  fine,  spacious  marble  art  gallery,  filled  with 
the  costliest  works  of  art.  He  professes  a  passion  for 
literature,  and  his  library  is  extensive.  He  is  even  a 
dictator  of  the  morals  of  other  people,  as  witness  his 
stopping  of  the  opera  "  Salome  "  when  it  was  first  pro- 
duced at  the  Metropolitan  Opera  House,  of  which  he  is  a 
patron  and  director.  Money,  grandeur,  prestige,  power, 
all  are  his.  And  all  the  while  the  prisons  are  crowded 
with  petty  thieves. 


STEPHEN   B.   ELKINS. 


CHAPTER  XI11 
THK  ELKINS  FORTUNE 

With  a  fortune  conservatively  estimated  at  850,000,- 
ooo,  but  undoubtedly  reaching  much  more,  Stephen  B. 
Klkins  is  one  of  the  notable  multimillionaires  ol  the 
United  States.  Compared  to  the  wealth  of  such  mag- 
nates as  the  Vanderbilts,  the  Goulds.  Morgan  and  Mill. 
Elkins'  possessions  are  not  remarkable ;  he  can  not  be 
placed  in  their  special  class.  But  his  wealth  has  ele- 
vated him  to  be  one  of  the  most  powerful  politicians 
in  the  country  ;  he  is  one  of  the  active  ruling  leaders  of 
the  United  States  Senate;  the  State  of  \Yest  Virginia 
is  virtually  his  province,  not  only  politically,  but  to  a 
great  extent,  as  his  personal  property,  lie  owns  or 
controls  many  of  its  mountains  and  its  coal  mines,  and 
much  of  its  other  natural  resources ;  some  of  its  rail- 
roads are  his,  and  also  its  traction  companies.  The 
West  Virginia  Central  Railroad,  sold  a  few  years  ago  to 
the  Goulds  for  Sl8.mo,ooo.  was  controlled  by  him;  this 
\vas  but  one  of  his  railroad-.  In  the  >ame  State  he  owns 
bank--  and  security  companies,  construction  corporations, 
coke  plants,  water  works  and  oilier  diversified  proper- 
ties. |  [<j  lias  large  mining,  land  and  other  interests  in 
the  West. 


312         HISTORY    01-    THE    GREAT    AMERICAN     FORTUNES 

or  Republican  matters  little;  its  control  is  a  strictly  fam- 
ily affair.  While  he  is  the  Republican  ruler,  his  father- 
in-law,,  Henry  G.  Davis,  reputed  to  possess  a  fortune  of 
at  least  830,000,000,  has  long  been  the  Democratic  boss. 
Whichever  of  these  political  parties  has  been  in  power, 
this  family  has  been  on  the  winning  side.  Some  few 
years  ago,  when  ''  conservative  Democracy  "  gained  th-..1 
upper  hand  over  the  middle-class  elements  in  the  Na- 
tional Democratic  Convention,  Davis  was  selected  a>  it- 
candidate  for  Vice  President  of  the  United  States.  T!K 
forms  of  "  popular  government,"  so-called,  still  prevail 
in  West  Virginia,  but  only  to  carry  out  the  designs  and 
will  of  such  magnates  as  Elkins  and  Davis,  as  in  other 
States  they  are  used  to  execute  the  plans  of  magnates 
who  rule  in  them.  The  Elkins-Davis  family  ordered  the 
legislature  to  elect  Elkins  to  the  United  States  Senate, 
and  the  honorable  Legislature  did  it.  State  and  county 
officials,  judges  and  other  functionaries  owe  their  incum- 
bency and  allegiance  to  this  family.  Elkins.  at  present, 
is  the  grand  factotum  of  West  Virginia  politics.  Yet 
twenty  years  ago  he  was  considered  an  interloper. 

The  same  wealth  that  has  enabled  him  to  center  in  him- 
self political  and  industrial  control  of  an  entire  State, 
i-.  it  is  reported,  to  bring  him  a  new  distinction.  His 
daughter,  it  is  rumored,  is  to  marry  the  Duke  of  the 
. \bruzzi.  a  member  of  the  royal  reigning  family  of  Italy. 
These  royal  families,  as  is  well  known,  are  extraordi- 
narilv  solicitous  of  the  preservation  of  caste;  "noble 
blood,'"'  hallowed  by  ancient  ancestry,  is  of  all  things, 
ndrd  as  a  passport  of  admittance  into  the  sacred 
And  for  intimate  admission  nothing  less  than 
"  loyal  blood  "  usually  suffices.  If  royalty  ex- 
ancestry  with  such  scrupulous  care,  why  should 
critically  examine  the  origin  of  the  wealth  to 


THE    ELK1NS    FORTUNE  313 

which  it  attaches  itself?  Would  royalty  think  of  marry- 
ing without  having  a  genealogy  duly  made  out  and  veri- 
fied? If  it  is  true  that  the  Elkins  fortune  is  to  enrich 
the  royal  family  of  Italy,  surely  its  history  likewise  ought 
to  he  known  and  treasured  in  the  royal  archives. 

Senator  Elkins  inherited  no  wealth ;  he  is  wholly  "  the 
architect  of  his  own  fortune."  What  were  the  species 
and  style  of  his  architecture?  According  to  the  routine 
biographies,  ordinarily  paid  for  at  advertising  rates,  his 
was  the  memorable  career  of  a  poor  boy  rising  to  great 
wealth  by  hard  work,  application  and  superior  ability. 
1  jilt  official  documents  have  a  very  different  tale  to  tell : 
and  while  they  do  not  explain  how  Elkins  obtained  all  of 
his  millions,  they  give  enough  vivid  details  of  the  meth- 
ods by  which  lie  first  became  a  millionaire. 

As  a  young  man,  Elkins  was  repeatedly  accused  of 
being  one  of  OuantrcH's  band  of  marauders  during  the 
Civil  \Yar.  as  to  which  charge  no  actual  proof  can  be 
found  in  the  records.  After  the  Civil  War  he  went 
to  Xew  Mexico.  There  he  studied  Spanish  and  became 
a  member  of  the  Territorial  Legislature.  His  enemies. 
both  partisan  and  personal,  brought  the  accusation 
against  him  that  he  was  the  originator  and  ringleader  of 
the  immense  land  frauds  current  in  Xew  Mexico.  Thi- 
particular  charge  was  both  unjust  and  false.  Long  be- 
fore Elkins  drifted  into  the  Southwest  the  land  frauds 
were  notorious;  what  lie  and  others  did  after  the  Civil 
War  was  nothing  more  than  a  continuation  of  what  had 
been  going  on  for  many  vears. 

It  i-  characteristic  of  the  \vay  in  which  American  hi- 
lory  lias  been  written  that  not  a  line  can  be  found  of 
the'  gigantic  fraud-  by  which  tens  of  million-  of  acre- 
of  land  were  stolen  in  the  Southwest  and  in  the  Pacific 
Stales  after  the  Mexican  War.  nlthr T^\]  court  record. 


314         HISTORY    OL'    THE    GREAT    AMERICAN"     FORTUNES 

and  other  official  documents  relate  enough  details  to 
make  an  extended  work  by  themselves.  In  Chapter  II, 
Vol.  ii.  of  this  work  a  brief  summary  of  these  colossal 
frauds  was  presented,  with  the  explanation  that  further 
facts  would  be  more  fully  set  forth  in  this  chapter. 

I  nder  the  Mexican  colonization  laws  no  individual 
was  entitled  to,  or  could  claim,  more  than  forty-eight 
thousand  acres.  The  Mexican  authority  in  California 
was  overthrown  by  the  American  forces  on  July  /,  1846. 
and  elsewhere  at  about  the  same  time.  \Yhen  it  was 
evident  that  the  Mexican  power  was  about  to  pass  away. 
Pio  Pico,  the  Mexican  Acting  Governor  of  California, 
at  once  began  to  issue  fraudulent  grants  of  land,  which, 
the  court  records  indicate,  were  given  for  bribes.  Most 
of  these  grants  were  presented  in  Ma}'.  184(1.  Xumer- 
ous  other  land  grants,  alleged  to  have  been  given  by  him 
at  the  same  time,  were  forgeries.  The  Supreme  Court 
of  the  I  nited  States  found  some  of  them  so  when  the 
Government  later  contested  their  validity.  The  Mex- 
ican governors  corruptly  gave  some  land  grants,  while 
many  other  grants  were  forged,  with  the  signatures  <>! 
the  Mexican  governors. 


When  the  Mexican  war  wa-  over.  American  capitalist  - 

bought  from  the   Mexican  h<  Kkr-  large'  numbers  of  the 

land  grants  covering  manv  millions  of  acre.-  of  the  very 

best    and    richest    agricultural,    grazing,    mining   or    tim- 

brr  hind  m  California,   New    Mexico,  Colorado,  Arizona 

ither  sections.      In  fact,  -  >me  of  ihese  alleged  gram- 

I  large  portions  of  the  populous  cilie^  and  towns. 

rican    caj  iiialist-  rule   applicati<  »n    t>  >    the 

ales  Government  to  have  tin-  "rants  confirmed. 


THE    ELK  INS    FORTUNE  3!  5 

hi  nearly  every  case  the  Government  denounced  the 
grants  as  forged  and  otherwise  fraudulent,  and  refused. 
The  claims  were  then  taken  to  the  courts. 

One  individual,  Henry  Cambnston,  claimed  eleven 
square  leagues  of  pasture  land  on  the  Sacramento  River, 
as  having  been  granted  by  Acting  Governor  Pico  on 
'May  23,  1846.  The  California  courts  decided  in  his 
favor.  These  local  courts  throughout  California  and 
other  portions  of  the  \Yest  seem  to  have  been  in  collu- 
sion with  the  land  grabbers,  and  were  often  composed 
of  judges  who  were  themselves  interested  in  land-grab- 
bing operations.  The  Government  carried  the  Cambus- 
ton  case  to  the  Supreme  Court  of  the  United  States,  as- 
serting  that  the  purported  grant  was  fraudulent  and 
forged.  The  Supreme  Court  of  the  United  States,  in 
December,  1857,  handed  down  a  decision  expressing 
doubts  of  the  genuineness  of  the  grant,  and  reversing 
the  decree  of  the  California  courts.1 

Another  claimant,  l-'uentes,  had  the  assurance  to  carry 
his  claim  to  eleven  leagues  of  California  territory  to  the 
Supreme  Court  of  the  United  States.  In  his  argument 
before  this  court  in  December,  1859,  United  States  At- 
torney General  Black  denounced  the  claim  as  "  fraudu- 
lent and  >purious.  a  base  and  impudent  forgery/' :  "It 
is  not  at  all  difficult  to  see,"  Attorney  General  Black 
continued.  "  how  and  when  this  grant  was  fabricated. 
It  is  in  the  handwriting  of  Manuel  Castro,  a  part  of 
whose  bu>iness  consisted  in  forging  land  grants."  This 
particular  grant.  Black  -tated.  was  dated  Monterey.  June 
12.  1843.  ')U^  't  had  been  forged  in  Mexico  City  in  i8;o. 
"There  are  several  other  grants  in  ManiK'l  Castro'- 


316         HISTORY    Oi;    Till-:    GR1-:.\T    AMERICAN'    FOKTfMiS 

handwriting,"  Black  added."  The  .Supreme  Court  of  the 
United  States  found  the  grant  at  issue  to  be  fraudulent, 
and  voided  it.4 

James  R.  Bolton  turned  up  with  a  claim  to  ten  thou- 
and  acres  of  land  in  the  vicinity  of  San  Francisco  —  a 
claim  worth,  at  a  low  estimate,  in  1851,  more  than  two 
million  dollars.5  The  grant  was  one  purporting  to  have 
been  made  to  Santillan,  a  priest,  by  Pio  Pico,  on  Febru- 
ary 10,  1846.  Bolton  had  his  claim  confirmed  by  the 
courts  in  California  on  the  ground  that  it  was  valid,  and 
that  he  had  bought  it  from  Santillan  in  April.  1850,  for 
8200.000.  The  Supreme  Court  of  the  United  States 
could  not  be  convinced  of  the  validity  of  the  grant  and 
dismissed  the  claim.'5  Another  particularly  flagrant  case 
was  that  of  the  claim  of  Juan  M.  Luco  and  Jose  Leandro 
Luco  to  270.000  acres  in  California.  They  claimed  that 
this  alleged  grant  was  made  on  December  4,  1845,  ^v 
Acting  Governor  Pio  Pico  to  one  Jose  de  la  Rosa,  from 
whom  they  swore  they  purchased  it.  The  Supreme 
Court  of  the  United  State.-;,  in  December,  1859,  found 
that  the  documents  were  forged.  "  Its  confirmation," 
said  this  court's  deci-ion  of  the  grant,  "  was  vigorously 
opposed  by  the  counsel  for  the  Government.  They  [the 
Government's  counsel]  allege  that  the  documents  pro- 
duced to  support  the  claim  were  forgeries,  supported  by 
perjuries  of  persons  who  had  conspired  to  defraud  the 
Government  of  an  immense  body  of  valuable  land. 
.  .  .  The  whole  of  the  testimony  is  beyond  doubt  a 
mere  fabrication.  ...  In  conclusion  we  must  say, 
that  after  a  careful  examination  of  the  testimony,  we 


THE    ELKINS    FORTUNE 


entertain  no  doubt  that  the  title  produced  by  the  claim- 
ants is  false  and  forged/'  7 

A  claimant,  one  White,  claimed  a  large  tract  of  land 
in  California  under  a  grant  alleged  to  have  been  made 
to  Antonio  Ortega.  The  Supreme  Court  of  the  United 
States,  in  December,  1863,  found  that  the  grant  \vas 
fraudulent  and  forged,  and  that  the  evidence  was  per- 
jury.8 In  the  case  of  Andres  Pico  against  the  United 
States  for  the  possession  of  eleven  square  leagues  of 
land  in  California,  the  Supreme  Court  of  the  United 
States  decided  that  the  grant  alleged  to  have  been  made 
by  Acting  Governor  Pio  Pico  on  June  6,  1846,  was  fraud- 
ulent and  that  the  documents  were  forged.9 

LARGE    ESTATES    SECURED    BY    FORGERY    AND    PERJURY. 

These  were  a  few  of  the  thirty-six  private  land  claims 
rejected  by  the  Supreme  Court  of  the  United  States 
up  to  1869.  They  were  crude  forgeries  and  the  cases 
were  not  skilfully  prepared.  But  thirty-three  other 
claims  were  confirmed.  Most  of  these  were  fully  as 
fraudulent  as  those  rejected,  but  the  work  of  forgery 
was  so  cleverly  done,  and  bought  witnesses,  well  trained 
in  the  art  of  giving  testimony,  gave  such  corroborative 
evidence,  that  the  majority  of  the  Supreme  Court  of 
the  United  States  declared  that  it  found  itself  in  a  posi- 
tion where  it  could  find  no  grounds  upon  which  to  dis- 
Xumbers  of  these  grant-  embraced 


7  Howard's  Reports,  Supreme  Court  of  the  United  States, 
xxiii:  5I5-543- 

s  Wallace's  Reports,  Supreme  Court  of  the  United  States 
i :  660-682. 

;)  Wallace's  Reports,  Supreme  Court  of  the  United  States 
:i :  270-282. 


318       HISTORY  or  Tin-;  <;RI-;.\T  AMERICAN"   HIRTUXES 

gold  and  silver  mine-  and  valuable  timber  lands,  as  well 
as  agricultural  tracts. 

An  example  of  this  successful  imposture  was  the  case 
of  Hornsby  vs.  the  United  States.  Ilornsby  claimed 
that  Acting  Governor  Pico  on  May  6,  1846,  had  granted 
40.000  acres  of  land  in  California  to  Jose  Roland,  from 
whom  Hornsby  te.-tified  that  he  bought  the  claim.  The 
majority  of  the  Supreme  Court  of  the  United  States,  in 
December.  i8r/j.  confirmed  the  grant  on  the  ground  that 
the  title  was  possessed  at  the  time  California  was  ad- 
mitted to  the  Union.  Hut  Justices  Davis,  Clifford  and 
Swayne  in  a  dissenting  opinion  said: 

.  .  .  The  Mexican  authority  was  overthrown  in  California 
on  July  /,  1846,  but  the  history  of  the  times  made  it  clear  to 
every  intelligent  man  for  a  considerable  period  before  this  date 
that  the  country  would  pass  to  the  jurisdiction  of  the  United 
States.  During  this  period  grants  of  land  were  made  very  freely 
by  Pio  Pico,  the  Acting  Governor,  and  the  records  of  this  court 
show  that  many  of  the  grant-  were  invalid  and  fraudulent. 
Doubtless,  grants  were  made  by  him  within  that  time  which 
were  valid,  but  all  mu-t  agree  that  every  urant  which  bear.-  his 
signature  should  be  examined  with  the  most  careful  scrutiny. 
By  the  record  in  this  ca-e.  it  apptars  that  the  petition  for  this 
grant  is  dated  May  5.  1846.  and  the  grant,  if  any  was  made, 
was  on  the  following  clay,  and  did  not  comply  with  the  require- 
ment- i'if  the  law  conferring  power  on  the  Governor  of  California 
to  grant  lands.  .  .  . 

Xo  possession  of  any  kind  is  proved  in  this  ca-e,  and  the  au- 
thenticity of  this  grant,  covering  an  area  of  over  forty  thoti- 
-and  acre--  <>f  land,  depend-  upon  the  testimony  of  a  -ingle  wit 
ness,  unsupported  by  any  proof,  except  the  imperfect  or  mutilated 
expidiente,  found  among  a  mass  of  loo-e  paper-  on  "he  :'r>nr  of 
Mile  of  the  rooms  of  the  custom  hou-e  at  Monterey  after  the 
Mexican  otiicml-  had  tied  on  the  approach  of  our  forces.10 

10  Wallace'-  Report-.  Supreme  C'lin  ->f  the  United  States- 
x  :  224-245. 


THE    ELKLXS    FOKTl' XK  319 

The  Congressional  committee  reports  of  the  period  are 
likewise  full  of  evidences  of  the  prevailing  frauds. 


AN'    ORGANIZED   SYSTEM    OF    FRAUD. 

In  his  report  to  Congress  in  1860,  United  States  At- 
torney General  Black  described  how  he  had  ordered  the 
Mexican  archives  to  he  collected,  and  he  gave  the  results 
of  that  investigation. 

"  The  archives  thus  collected,"  he  wrote. 

furnished  irresistible  proof  that  there  had  been  an  organized 
system  of  fabricating  land  titles  carried  on  for  a  long  time  in 
California  by  Mexican  officials;  that  forgery  and  perjury  had 
been  reduced  to  a  regular  occupation:  that  the  making  of  false 
grants,  with  the  subornation  of  false  witnesses  to  prove  them, 
had  become  a  trade  and  a  business.  .  .  .  There  was  al-o 
compiled  from  the  records  here  a  faithful  chart  of  all  of  the 
professional  witnesses  or  persons  supposed  to  have  hired  them- 
selves out  to  do  the  busine-s  of  false  ^-wearing  of  claims.  To- 
day full  biographies  of  nearly  all  of  the  men  who  ha\e  been 
engaged  in  these  schemes  of  imposture,  from  governors  down 
to  the  lowest  suborned  witnesses,  can  now  be  furnished  when- 
ever necessary. 

Attorney  General  Black  set  forth  further  : 

It  must  be  remembered  that  the  grants  in  most  of  these 
fraudulent  cases  were  very  skilfully  got  up.  and  were  supported 
by  the  positive  oaths,  not  merely  of  obscure  men  whose  charac- 
ters were  presumed  to  be  fair,  but  also  by  the  testimony  of 
distinguished  men,  who  had  occupied  high  social  and  political 
places  under  the  former  governors.  Their  honesty  in  many 
cases  was  never  suspected  until  after  the  records  were  brought 
to  Washington.  They  [the  frauduh-nt  land  claims]  passed 
through  two  lower  tribunals,  some  of  them  without  being  ques- 
tioned, and  nearly  all  of  them  without  successful  opposition, 
Tin-  value  of  the  land<  claimed  under  grants  a^cer- 


320 

taincd  to  be  forged  is  8150,000,000.  .  .  .  Il  is  vain  to  lock 
tor  public  morality  under  a  government  \vhich  fails  to  distin- 
guish het\veen  honest  titles  and  fraudulent  claims.11 

Reporting  on  February  24,  1869,  on  the  claim  of  \Yil- 
liam  McGarrahan  to  a  large  land  grant  in  California  in- 
cluding vast  rich  mines,  alleged  to  have  been  granted  by 
-Voting  Governor  Pico  to  Vincent  P.  Gomez  and  sold  to 
McGarrahan,  the  House  Committee  on  Claims  wrote: 

.  .  .  Gomez,  Abrego  and  Moreno  [the  secretary  of  Acting 
Governor  Pico]  are  suitable  associate?.  They  are  equally  no- 
torious for  the  forgeries  and  perjuries  in  which  they  have  been 
concerned.  Gome;  and  Abrego  were  the  chief  instruments  in 
the  false  swearing  in  the  great  Limantour  swindle  that  at- 
tracted so  much  public  attention  some  years  ago.  Ex-Secretary 
Stamon  visited  California  in  1858  in  behalf  of  the  United 
States  in  connection  with  land  cases,  and  then  found  that 
Abrego  had  been  a  witness  to  support  thirty-two,  and  Gomez, 
twelve,  claims,  most  of  which  ascertained  to  be  frauds  or 
forgeries.1- 

The  committee  went  on  to  say  that  "  many  of  the 
towns  and  cities  of  California  are  covered  by  these  re- 
jected claims,  and  if  Congress  is  to  readjudicate  and  re- 
verse one  case  on  ex  parte  evidence,  then  the  other  thirty- 
five  will  be  resurrected,  and  an  army  of  land  -harks, 
lobby  agents  and  lying  witnes-es  will  invade  the  Capitol 
and  defile  the  halls  of  legislation  with  their  schemes  of 
forgery  and  perjury."  The  committee  referred  to  "  a 
bagful  of  the  affidavits  of  drunken  and  venal  Mexicans 
who  can  be  hired  for  five  dollars  apiece  to  swear  to 
anything."  K:  It  said  that  dependent  upon  the  passage 

;:  Ex-Doc.  Xo.  84,  Thirty-sixth  Congress.  Also,  Hou=e  Re- 
ports.  Third  Session,  Fortieth  Congress,  Report  Xo.  261  :  544. 

12  Report  Xo.  261,  etc.,  1809:5.35.  In  "lie  case  especially, 
Gomez  had  been  convicted  by  the  Supreme  Court  of  the  United 
State:-  of  ^wearing  to  a  fal.-e  date.  See  Wallace's  Reports,  Su- 
preme Court  of  the  United  States,  vi :  =;8o. 

!:;  Ibid..  543. 


THE    KLKIXS   FOKTUXK  321 

of  the  McGarrahan  bill,  was  a  prize  of  more  than  $500,- 
ooo,  and  that  ''  politicians,  lawyers,  and  editors  have  taken 
large  shares  in  the  lottery  ;  the  professional  lobby,  both 
male  and  female,  have  been  marshaled  behind  and  around 
AIcGarrahan.  The  crowd  is  impatient  of  delay,  and 
hungry  for  the  spoils  of  victory.''  14 

CORRUPTION'    OF    COXGRKSS    AXI)    THK    COURTS. 

The  national  Capitol  was  not  only  filled  with  lobbyists 
for  these  landgrabbers,  but  members  of  Congress  were 
financially  interested  in  the  success  of  the  fraudulent 
claims,  or  themselves  held  claims  in  the  names  of  dum- 
mies. It  was  also  strongly  suspected,  although  never 
proved,  that  at  least  one  Justice  of  the  Supreme  Court 
of  the  United  States,  appointed  during  the  Civil  War, — 
and  the  very  one  whose  vote  often  decided  the  fate  of 
the  claims  —  was  interested,  either  financially,  politically 
or  by  friendly  connection  with  certain  of  the  land  claim- 
ants. As  we  have  seen  in  other  chapters,  it  was  no  un- 
usual matter  for  the  highest  judiciary,  as  well  as  the 
lowest,  to  hold  stock  or  other  evidences  of  property  in 
corporations  or  enterprises,  cases  affecting  which  were 
decided  by  those  very  judges  or  their  associates.  These 
decisions  would  then  take  rank  as  precedents,  to  be  cited 
in  future  cases. 

Rut  the  courts  were  not  the  sole  reliance  of  the  land 
grabbers  and  oilier  plunderers.  It  was  Congress  tli:  \ 
the}-  usually  depended  upon  for  the  confirmation  of  their 
schemes.  A  confirming  act  passed  by  Congress  was  con- 
sidered as  law  strictly  binding  upon  the  courts,  and  it 
was  to  be  generally  expected  that  the  courts  would  con- 


322         HISTORY    OF    T1IK    C.RKAT    AMERICAN     FORTUNES 

.-true  the  aets  of  Congress  with  the  closest  technicality. 
Thus  it  was,  to  mention  only  one  instance  of  many  in- 
stances, that  Marshall  O.  Roberts  and  his  partners  suc- 
ceeded in  robbing  the  United  States  Treasury  !out  of 
millions  of  dollars  by  lobbying  an  act  through  Congress 
so  adroitly  worded  that,  after  the  Court  of  Claims  had 
dismissed  the  claim,  the  Supreme  Court  of  the  United 
States  decided,  upon  technical  grounds,  that  the  act  of 
Congress  amounted  to  a  ratification  of  their  claim."5 

Beginning  by  about  the  year  i8r>o.  Congress  was  "  in- 
duced "  to  confirm  one  private  land  claim  after  another. 
The  reports  of  a  number  of  the  Congressional  Com- 
mittees on  Private  Land  Claims  strongly  suggest  bribery, 
but  no  positive,  specific  proof  appears.  Very  often  these 
measures  were  passed  in  the  burr}-  and  confusion  of  the 
last  days  of  a  session,  with  few  members  knowing  what 
they  were. 

After  the  passage  of  these  acts  by  Congress,  the  next 
step  was  to  have  a  fraudulent  survey  of  the  alleged 
grants  made  by  land  office  officials.  In  order  to  make 
these  fraudulent  surveys  under  form  of  law.  the  land- 
grabbers  lobbied  two  acts  through  Congress.  One  act. 
passed  in  1860.  authorized  surveys  to  be  made  at  the 
expense  of  "  settlers."  This  meant  that  capitalists  were 
virtually  allowed  to  hire  Government  surveyers,  and  ar- 
range with  them  to  increase  fraudulently  the  boundaries 
of  the  alleged  grants.  This  is  precisely  what  happened, 
as  is  shown  in  the  numerous  official  reports  cited  in 
Chapter  11.  vol.  U.  Another  act.  passed  by  Congress 
in  !<S~i,  provided  that  the  amounts  deposited  by  settlers 
-hould  be-  applied  as  part  pavment  for  the  land-  sur- 
veyed. The  plain  meaning  of  this  act  was  that  the  money 
paid  by  the  land-grabber  for  fraudulent  surveying  was 

15  See  Chapter  iii.  Vol.  ii,  of  this  work. 


THE    ELKIXS    FORTUNE  323 

held  to  be  a  payment  for  the  stolen  lands,  and  in  law 
\vas  technically  equivalent  to  a  virtual  confirmation  of 
his  claim.  By  means  of  these  fraudulent  surveys,  cor- 
ruptly arranged  for,  dozens  of  grants  of  a  few  thousand 
acres  each  were  enlarged  so  as  each  to  embrace  hundreds 
of  thousands,  and  in  some  instances,  millions  of  acres.16 

LITTLE  OPPORTUNITY  FOR  THE  POOR  SETTLER. 

The  colossal  private  claim  land  frauds  were  by  no 
aieans  confined  to  California.  They  went  on  in  New 
Mexico,  Colorado,  Arizona  and  other  States  and  Terri- 
tories. The  poor  settler  had  very  little  opportunity  to 
secure  land.  Almost  wherever  he  appeared  he  was  con- 
fronted by  the  capitalists  who  claimed  vasi  stretches  of 
land  —  agricultural,  grazing,  mineral  and  timber.  So 
scandalous  was  this  condition  that  Secretary  of  the  In- 
terior Thompson,  in  a  report  dated  December  n,  1859, 
'io  ('resident  Buchanan,  commented: 

The  advantage's  and  profits  arising  from  the  settlement  of  a 
/lew  country  ought  to  be  enjoyed  by  the  early  settlers.  They 
have  peculiar  hardships  and  privations  to  undergo.  The  law 
does  not  contemplate  that  they  shall  have  any  competition,  ex- 
cept from  other  actual  settler.--,  in  selecting  the  niO--t  fertile 
lands  and  the  choicest  locations.  .  .  .  There  is  reason  to  be- 
lieve that  the  withholding  of  public  lands  from  a  public  offer- 
ing, and  consequently  from  private  entry,  has  often  proved  a 
temptation  to  fraud  and  an  inducement  to  perjury;  and  un- 
j-crupulous  -peculators  profit  by  it  more  than  any  other  class.17 


324         HISTORY    01-     Till-.    GRKAT    AMERICAN     KORTl'XKS 

sources.  Acting-Governor  \\  .  W.  II.  Davis,  of  New 
Mexico,  reported  to  the  Secretary  of  the  Interior  on  Sep- 
tember 10,  1857,  that  Xe\v  Mexico's  mineral  wealth  had 
been  long  known,  and  he  drew  a  fascinating  picture  of 
its  rich  deposits.  '  That  the  country  is  rich  in  the  pre- 
cious metals,"  he  wrote,  "  there  can  be  no  doubt.  There 
is  good  reason  to  believe  that  ores  of  silver  occur  in  all 
of  the  ranges  of  the  mountains  bordering  the  Rio  Grande, 
from  the  boundary  line  on  the  south  to  the  extreme  north 
of  the  Territory."  .Abandoned  mines,  he  added,  were 
very  numerous.  Hardly  a  mountain  range  in  the  whole 
country  did  not  disclose  evidence  of  the  presence  of 
precious  metals.  There  were  gold  ores  and  copper  in 
abundance,  and  thick  deposits  of  bituminous  coal.18 

A    LAND   GRANT    GROWS    FROM    96,000    TO    NKARLY 

2,O()O,()00    ACRKS. 

One  of  the  private  Mexican  land  claims  was  that  of 
Charles  Heaubien  and  Guadalupe  Miranda.  They 
claimed  that  the  Mexican  Governor  Armijo  had  made 
them  a  grant  on  February  22,  1841.  On  September  15, 
1857,  the  United  States  Surveyor  General  of  New  Mex- 
ico reported  the  grant  to  Congress  as  embracing  96,000 
acres.  Congress  confirmed  it  on  June  21,  1860.  One 
L.  P..  Maxwell  bad  bought  the  claim  from  Beaubien  and 
Miranda,  and  in  1809  he  applied  to  the  General  Land 
( Jfiice  for  a  survey,  claiming  that  the  grant  comprised 
about  two  million  acres,  partly  in  Colorado,  but  mainh 


The  Commissioner  of  the  General  Land  Office   freeh 
expressed  his  amazement  at  the  audacity  of  this  claim 

1S  Executive   Documents,   First    Session,   Thirty-fifth   Congress 
1857-58,  Vol.  ii,  Doc.  No.  2 :  286-288. 


Till-:    ELKIXS    FORTUNE  325 

lie  reported  that  the  claim  was  an  impossible  one;  that 
the  Mexican  colonization  laws  had  limited  the  area 
granted  to  any  one  individual  at  48,000  acres,  and  that  in 
confirming  the  grant,  Congress  had  confirmed  it  to  the 
extent  of  cjUooo  acres  only  —  48,000  acres  to  Beaubien 
and  Miranda  each.  This  decision  of  the  Land  Commis- 
sioner was  upheld  by  Secretary  of  the  Interior  Cox.19 

The  Maxwell  Land  Grant  and  Railroad  Company  was 
then  incorporated  to  push  and  exploit  the  grant.  This 
company,  in  1871.  renewed  the  application  for  a  survey 
and  a  patent  under  the  claim  as  put  forth  by  Maxwell  in 
1869.  Secretary  of  the  Interior  Delano  refused  the  ap- 
plication, declaring  that  the  decision  of  Secretary  Cox 
in  1869  was  final  as  to  the  extent  of  the  grant  —  96.000 
acres  —  so  far  as  the  executive  departments  of  the  Gov- 
ernment were  concerned."0 

The  Government  officials  at  Washington  were  irritated 
at  the  persistence  of  the  claimants  and  their  refusal  to 
comply  with  the  law.  On  January  28.  18/4,  the  Com 
missioncr  of  Public  Lands  ordered  the  Surveyor  General 
of  Xew  Mexico  to  treat  the  whole  of  the  grant  as  public 
lands,  inasmuch  as  the  claimants  refused  to  obey  the 
terms  of  the  decision  of  the  Department  of  the  Interior. 

ELKIXS    BECOMES    A     I'RIXCIPAL    OWXKR. 

\Yhv  did  the  claimants  decline  to  complv  with  the 
law  ."'  r>ccause.  as  the  sequel  showed,  the  foremost 
I'nited  States  Territorial  officials  in  Xew  Mexico  were 
in  collusion  with  them.  I  )espite  the  order  of  the  De- 
partment of  the  interior,  which  wa-  law.  the  Territorial 


3^<>         UlslOKY    OF    THE    GREAT    AMERICAN    FORTUNES 

officials  continued  to  assess  the  alleged  grant  as  private 
property  for  taxes.  The  taxes,  by  prearrangement,  went 
unpaid,  and  a  fraudulent  tax  sale  was  held  at  public  auc- 
tion in  January,  18/7,  and  the  grant  was  sold  for  an  al- 
leged tax  debt.  The  nominal  purchaser  was  M.  W. 
Mills,  a  member  of  the  New  Mexico  Legislature.  Mills 
transferred  the  alleged  tax  title  to  T.  B.  Catron,  United 
States  District  Attorney  for  Xew  Mexico.  Shortly  af- 
terward it  was  revealed  that  Stephen  B.  Elkins  was  the 
real  party  behind  the  whole  transaction,  and  that  he  was 
the  chief  owner  of  the  alleged  title.21 

Elkins  had  long  been  a  powerful  Republican  politician 
in  Xew  Mexico.  During  President  Grant's  administra- 
tion he  had  been  United  States  District  Attorney  in 
that  territory.  At  that  time  the  peonage  system  of 
slavery  was  widespread  in  Xew  Mexico,  as  it  is  still  in 
Mexico.  The  laborer  who  fell  in  debt  to  his  employer 
could  not  quit  employment  until  the  indebtedness  was 
first  discharged.  This  resulted  in  the  worker's  practical 
slavery.  Under  the  United  States  laws  the  Government 
paid  a  fee  of  $25  for  each  conviction  of  persons  charged 
with  violating  the  peonage  statutes  of  the  United  States. 
Klkins.  it  was  said,  procured  the  indictment  of  thousands 
of  Mexican  violators  of  this  law,  convicted  them,  or 
compromised  the  cases,  and.  thus  was  enabled  to  pocket 
the  fee  of  825  in  each  case.  He  became  reasonably  rich 
bv  tliL  process. 

I  le  was  then  elected  a  delegate  to  Congress  from  Xew 

Mexico,    and    it    was    during   this   time   that   he   got   hold 

of   the    Maxwell   land   grant    and   pushed   it    in   Congress. 

[-(•cord-,  of  tin-  General   Land  Oitice,  of   January  J<S, 


Report     NII.     1253. 
Office,   reported,   in 
<  >\VIHT  of  the  grant 
time   l:~.ikin>°  !>r<itl]er  a:;d   .\iarmon  matlf  the  official  ^urvev. 


THE    EL  KINS    FOR  1  UN  1C  327 

1X74,  show  that  Stephen  B.  Klkins  was  interested  in  hav- 
ing this  alleged  grant  surveyed  ;  he  was  at  that  very  time 
in  Congress.  Immediately  after  the  fraudulent  tax  sale 
had  been  held,  the  Maxwell  Land  Grant  and  Railway 
Company  made,  in  1877,  another  application  to  the  Gen- 
eral Land  Office  for  a  survey  and  patent.  This  time 
there  was  no  opposition  from  the  Government  officials 
at  Washington.  Matters  moved  with  extraordinary 
smoothness. 

The  General  Land  (  )ffice  ordered  a  survey.  Who  did 
the  surveying?  One  of  the  two  surveyors  was  Klkins' 
brother,  John  T.  Klkins.  On  August  15,  1877.  the 
Lnited  States  Surveyor  General  in  Xew  Mexico  entered 
into  a  contract  with  John  T.  Klkins  and  Robert  T.  Mar- 
mon  for  the  execution  of  the  survey.  Their  bondsmen 
were  Stephen  1!.  Klkins  and  James  L.  Johnson."  These 
surveyors  reported  the  grant  as  embracing,  in  all.  1.714.- 
764.94  acres.  As  reported  by  them,  it  comprised  the 
finest  lands  in  Xew  Mexico,  watered  by  the  Rio  Grande 
River  with  its  numerous  tributaries  ;  towns  and  cities 
and  villages;  mountains  filled  with  mineral--;  it  took  in 
a  large  range  of  the  Raton  Mountains  with  their  rich 
gold  and  silver  and  coal  depo-its  and  timber  lands;  and 
extended  far  into  Colorado,  where  it  covered  vast  tracts 
of  land.  The  General  Land  Office,  on  May  19.  1X71). 
gave  a  patent,  in  the  form  of  a  (|uit-claim.  for  the  whole 
of  the  1 ,7 14. 764.94  acre-  claimed  in  the  survey. 

Meanwhile,  the  grant  had  been  mortgaged  to  a  syndi- 
cate of  Holland  capitalists  lor  the  sum  of  700.000 
pounds  in  sterling  monev  and  Dutch  currency."'"  To 
their  consternation,  they  soon  found  that  they  had  a 
bitter  law-nil  on  tbe'r  hands. 

"-'  Mouse  ! 


328          HISTORY    OF    TIIK    GREAT    A.MEKICAX     FORTUXES 

They  had  been  entirely  unaware  of  the  fact  that  the 
Government  challenged  the  validity  of  the  grant. 


Till:    GOVERNMENT    CHARGES    FRAIT). 

The  Government  brought  an  action  to  have  the  grant 
declared  void.  On  August  25,  1882,  it  sued  the  Max- 
well Land  Grant  Company,  the  Denver  and  Rio  Grande 
Railway  Company,  the  Atchison,  Topeka  and  Santa  Fe 
Railway  Company  and  the  Pueblo  and  Arkansas  Valley 
Railroad  Company.  The  Government's  bill  of  complaint, 
the  court  record  reads,  "  charged  that  the  survey  on 
which  this  patent  was  issued  was  falsely  and  fraudulently 
made,  and  that  the  Maxwell  Land  Grant  Company  and 
certain  parties  who  made  this  survey  under  a  contract 
with  the  Government,  conspired  to  cheat  the  Govern- 
ment of  the  I  nited  States  by  including  a  larger  amount 
of  land  than  was  intended  to  be  embraced  b\  the  orig- 
inal grant  of  the  Republic  of  Mexico;  and  it  especially 
charged  that  about  2(15.000  acres,  to  wit,  all  the  land  1\ 
ing  in  the  county  of  Las  Animas,  in  the  state  of  Colo- 
rado, were  fraudulently  included  in  this  survey  and  were 
of  the  value  of  two  millions  of  dollars."  ~* 

The  I  nited  States  Circuit  Court  of  Colorado  dismissed 
the  Government's  suit,  as  was  expected,  for  it  was  no- 
torious that  the  railroad  and  land-seizing  interests  largely 
controlled  -uch  courts,  some  of  the  judges  of  which  had 
been  attorneys  for  those  identical  interests.  The  Gov 
eminent  carried  the  case  to  the  Supreme  Court  of  the 
I  "nited  States.  In  the  argument  before  this  court  on 
March  8.  <j.  ro  and  n,  1887,  the  Government  contended: 

|-'ir>t      -That    the    grant     <if    the     Republic    of    Mexico 
could    not,    under    the    Mexican    la\v-.    exceed    altogether 


Tllli    ELKINS    FORTUNE 


twenty-two  square  leagues,  equivalent  to  97,424.8  acres 
of  land. 

Second  —  That  the  report  of  September  15,  1857,  of 
the  Surveyor  General  of  New  Mexico,  recommended  the 
grant  for  confirmation  for  no  greater  extent  of  land  than 
twenty-two  square  leagues. 

Third  —  That  the  confirmatory  act  of  June  21,  1860. 
did  not  operate  as  a  grant  de  novo,  or  new  grant,  for 
the  land  in  excess  of  twenty-two  square  leagues. 

Fourth  —  That  the  survey  under  which  the  patent  was 
issued,  and  the  patent  itself,  included,  in  addition  to  the 
twenty-two  square  leagues,  many  hundred  thousand 
acres  not  included  in  the  grant  as  confirmed,  and  also 
several  hundred  thousand  acres  ( about  400,000 )  lying 
upon  the  outside  of  the  eastern  and  northern  boundaries, 
also  not  included  in  the  confirmed  grant. 

Fifth  —  That  the  patent  was  issued  by  officers  of  the 
Land  Department  to  include  the  million  six  hundred 
thousand  excess  acres  because  "  of  the  frauds  and  deceit- 
practiced  upon  the  Commissioner  of  the  General  Land 
(  Mtice  and  his  agents,  and  by  Surveyor  General  Spencer, 
and  the  deputy  I'nited  States  surveyors,  Flkins  and 
Marmon,  in  the  interest  of  such  owners."25 

In  his  argument  United  States  Assistant  Attorney 
General  Maurv  said:  ..."  Mcing  a  Mexican  grant 
in  the  beginning  and  subject  to  the  laws  and  customs  of 
Mexico,  it  is  for  this  court  to  determine  whether  there 
exists  anv  authorized  process  of  evolution,  hv  which  this 
original  Mexican  grant  of  twenty-two  square  leagues  to 
I'eaubien  and  Miranda  have  grown  and  expanded  into 
the  princely  domain  covered  bv  tin's  patent."  '-'"  Maury 
contended  that  fraud  had  been  abundantly  proved.  J. 

s   Report.-.  Vi>I.  cxxi  ;  ^-'7. 


330         HISTORY    OF    THE    GREAT    AMERICAN    FORTUNES 

A.  Bentley,  special  counsel  for  the  Government,  submit- 
ting a  long  brief  arguing  that  frauds  were  practised 
upon  the  Government  in  the  enlargement  of  the  bound- 
aries of  the  grant,  and  he  also  argued  that  the  decision 
uf  Secretary  of  the  Interior  Cox.  in  1869,  was  final. 

TIII-:  SUPREME  COURT'S  DECISION. 

Piles  upon  piles  of  proofs  that  the  grossest  frauds  had 
been  committed  could  not  convince  the  Supreme  Court 
of  the  United  States.  In  its  decision  of  April  18,  1887, 
it  held  that  the  act  of  June  21,  1860,  was  virtually  a 
new  grant,  and  that  it  confirmed  the  grant  to  the  full 
extent  of  the  1.714.764.94  acres  claimed  —  a  decision 
received  with  the  utmost  amazement  by  the  whole 
country. 

With  this  decision  in  hand  the  Maxwell  grant  holders 
proceeded  to  evict  settler,-  right  and  left.  This  raided 
a  great  storm.  The  settlers  on  the  grant  organized 
and  appointed  (.).  I*.  McMains  their  agent  to  present 
their  petition  for  redress  to  Congress.  In  an  affidavit 
dated  May  <;.  1892.  McMains,  on  behalf  of  the  settlers, 
charged  the  different  United  States  authorities,  such  as 
Secretarv  of  the  Interior  Xoble,  Land  Commissioner 
Carter  (at  pre-ent,  1909.  a  United  States  Senator  from 
Montana  )  and  other  officials  with  refusing  to  throw 
'••pen  the  grant  as  public  lands.  This  refusal,  the  afii- 
pointed  out,  \va-  in  violation  of  the  explicit  act 
of  Congress  of  June  21,  1860.  The  affidavit  read  on: 

the  deponent  further  dcpo-cs  and  say-  that  S.  B.  Elkins 
iva>  :  president  of  the  Maxwell  La;  d  firant  and  l\a:l- 

.'.•;•.  Company,  which  was  bankrupt  at  the  lime  of  hi-  re.-ig- 

in  [875:  that  after  1875  ilie  -aid  S.  l'>.  Eikins  had  no 
'  :  ••  tin-  -aid  Company  a-  nfticer  or  coun.-el.  and  t»'>k 


33* 

no  part  in  the  company's  affairs ;  that  he  was,  nevertheless, 
interested  as  an  outsider  and  speculator  in  having  the  land  re- 
quired by  law  to  be  treated  as  public  land,  again  treated  and 
surveyed  as  the  alleged  Beaubien  and  Miranda  or  Maxwell 
grant,  and  made  a  trip  to  Europe  in  the  latter  part  of  1875-76 
with  a  scheme  in  view  for  the  reorganization  of  the  Maxwell 
Land  (I rant  Company. 

That  T.  B.  Catron  of  Xew  Mexico,  who  was  interested  with 
Klkins  in  having  the  land  required  by  law  to  be  treated  as 
public  land,  again  treated  and  surveyed  as  the  alleged  Maxwell 
grant,  became,  on  July  19,  1877,  by  an  unlawful  and  fraudulent 
tax  title  deed,  an  alleged  owner  of  nearly  2,000,000  acres  of  pub- 
lic land  as  the  so-called  Beaubien  and  Miranda  or  Maxwell 
grant:  that  in  order  to  profit  by  the  unlawful  tax  title  deed 
10  public  land  as  the  alleged  Maxwell  grant,  it  became  necessary 
to  defeat  the  enforcement  of  the  final  and  valid  order  of  the 
Department  of  the  Interior  of  January  28,  1874,  requiring  the 
lands  claimed  by  the  Maxwell  grant  claimants  to  be  treated  as 
public  land,  by  prosecuting  anew  the  adjudicated  Maxwell  grant 
claim  against  the  United  States  to  survey  and  patent; 

That  the  panic.-  con-piring  to  pro.-ecute  said  adjudicated 
claim  against  the  L'nited  State-,  in  violation  of  Section  5498  of 
the  Revised  Statutes,  were  lion.  S.  B.  Klkins,  then  delegate 
to  Congress  from  Xew  Mexico;  lion.  T.  B.  Catron.  then  L'nited 
States  Attorney  i»r  Xew  Mexico,  and  Hon.  J.  A.  Williamson, 
then  Conmiis>ioner  of  the  (ieneral  Land  Office;  that  the  ob- 
ject of  said  conspiracy  was  accomplished,  the  enforcement  of 
the  valid  order  »i  January  28,  1874,  an(l  the  :u'L  ot~  Congress  of 
June  21,  1800.  wa>  defeated,  homestead  and  preemption  settlers 
were  deprived  ut  their  private  and  vested  rights  without  due 
process  of  law  and  the  L'nited  States  deprived  of  its  surveyed 
public  lands.1-'7 

The  affidavit  went  on  to  -ay  that  "the  refusal  of  the 
officials  to  enforce  the  act  of  Congress  is  in  the  interest 
of  the  afore-aid  conspiracy;  that  by  Mich  wrongful  re- 
nisal  said  secretary  and  commissioner  are  aiding  and 


332        HISTORY    OF    THE   GREAT    AMERICAN    FORTUNES 

abetting,  by  trick  and  fraud,  the  said  conspiracy." 28 
The  House  Committee  on  Private  Land  Claims,  to 
whom  the  petition  of  the  settlers  was  referred,  found 
that  the  statements  regarding  the  Xew  Mexican  portion 
of  the  grant  were  true.  As  to  the  four  hundred  thou- 
sand acres  in  Colorado,  the  committee  reported : 

"  Xo  application  by  the  Maxwell  Land  Grant  Railway 
Company  has  been  made  to  the  Commissioner  of  the 
General  Land  Office  for  the  survey  of  public  land  in 
Colorado  in  1877  as  a  portion  of  the  alleged  Maxwell 
grant ;  but  a  party  who  is  in  nowise  connected  with  the 
company  or  acting  in  any  capacity  in  behalf  of  the  com- 
pany—  Hon.  S.  B.  Elkins  —  did  ask  for  a  survey  to  be 
approved  " —  that  would  include  public  lands  in  Colorado 
as  belonging  to  the  Maxwell  grant.  It  was  after  this 
survey  that  the  whole  of  the  1.714.764.94  acres  were 
mortgaged  to  Dutch  capitalists  for  £700,000.  This  land 
in  Colorado,  the  committee  stated,  was  unlawfully  ap- 
propriated. The  committee  concluded  :  "  And  it  is  the 
opinion  of  your  committee  that  the  lands  included  within 
the  Colorado  portion  of  the  alleged  Maxwell  grant  were 
required,  by  act  of  June  21,  1860,  to  be  treated  as  pub- 
lic land  .  .  .  and  was  not  a  portion  of  the  original 
Beaubien  and  Miranda  grant."-9 


SURVEYOR    GENERAL    JULIAN    STATES    THE    CASE. 

Congress  took  no  action  on  the  report  of  the  House 
Committee  on  Private  Land  Claims,  and  the  result  of 
this  complete  inactivity,  coupled  with  the  decision  of  the 
Supreme  Court  of  the  I  niled  States,  was  that  the  up 


THK    ELK1XS    FORTUNE  333 

propriators,  or  their  assignees,  of  the  1,714,764.94  acre-, 
were  allowed  to  retain  a  possession  which  thereafter 
was  undisputed.  George  \Y.  Julian,  United  States  Sur- 
veyor General  of  Xew  Mexico,  during  President  Cleve- 
land's first  administration,  found  a  state  of  affairs  in 
that  territory,  which,  in  recounting  Elkins'  career,  he 
described  in  a  speech,  on  September  14,  1892,  before  the 
llendricks  Club  at  Indianapolis.  After  relating  some  of 
Elkins'  early  transactions  in  Xew  Mexico.  Julian  said : 

This  experience  amply  prepared  him  for  the  brilliant  ventures 
in  real  estate  through  which  he  became  rich.  His  dealings  were 
mainly  in  Spanish  grants,  which  he  bought  for  a  very  small 
price  from  their  Mexican  claimants  or  their  grantees.  The 
boundaries  of  these  grants  were  vague  and  uncertain,  and  their 
definite  settlement  had  to  be  determined  by  the  Surveyor  Gen- 
eral of  the  Territory,  subject  to  the  final  action  of  Congress. 
Elkins  became  a  member  of  the  land  ring  of  the  territory,  and 
largely  through  his  influence  the  survey  of  these  grants  was 
made  to  contain  hundreds  of  thousands  of  acres  that  did  not 
belong  to  them.  He  thus  became  a  great  landholder,  for  through 
the  manipulation  of  committees  in  Congress  grants  thus  illegally 
surveyed  were  confirmed  with  their  fictitious  boundaries. 

He  made  himself  particularly  conspicuous  a>  the  hero  of  the 
famous  Maxwell  grant,  which,  as  Secretary  Cox  decided  in 
iiSfio..  contained  only  twenty-two  square  league-,  or  about  96,000 
acres,  but  which,  under  the  manipulation  of  Klkins,  was  sur- 
veyed and  patented  for  1,7 14. 7(14.0.4  acres,  or  nearly  2.680  square 
miles.  Congress,  through  the  action  of  its  committees,  was 
beguiled  into  the  confirmation  of  the  grant,  with  the  exterior 
boundaries  vaguely  indicated  in  it  so  stretched  as  to  cover  the 
whole  nf  this  immense  area,  and  which  continuation  by  Con- 
gress  compelled  the  Supreme  Court  to  recognize  thi>  astound- 
ing robbery  as  valid.  By  such  methods  as  these  more  than 
10,000,000  acres  of  the  public  domain  in  Xew  Mexico  have  be- 
come the  spoil  of  land-grabbers,  and  the  ringleader  in  this  game 
of  spoiliation  was  Stephen  H.  Elkins.  the  confederate  of  Stephen 
\Y.  Dorsey  and  the  master  spirit  in  the  movement. 

lie  was  thoroughly  qualified   for  his  work.     He  was  irrepres- 


334         HISTORY    OF    THI-:    GRKAT    AMERICAN    FORTUNES 

sible  and  full  of  resources.  He  was  a  genius  in  business,  ar.d 
in  the  pursuit  of  his  ends  was  singularly  unshackled  by  a  con- 
science. He  used  the  Surveyor  General  of  the  Territory,  the 
Land  Department  in  Washington,  and  the  committees  of  Con- 
gress as  his  instruments  in  fleecing  poor  settlers  and  robbing 
the  Government  of  its  lands.  To  cheat  a  man  out  of  his  home 
is  justly  regarded  as  a  crime  second  only  to  murder,  and  to  rob 
the  nation  of  its  public  domain  and  thus  abridge  the  oppor- 
tunity of  landless  men  to  acquire  homes  is  not  only  a  crime 
against  society,  but  a  cruel  mockery  of  the  poor.  If  any  such 
considerations  ever  di-turbed  the  dreams  of  Mr.  Elkins.  they 
were  summarily  silenced  by  hi.-  overmastering  zeal  in  the  work 
of  "  practical  politics."  According  to  Dor.-ey,  Hlkins  knew  more 
than  any  other  person  about  the  star  route  cases,  which  be- 
came famous  a  dozen  year-  ago,  and  tie  will  also  be  remem- 
bered as  engaged  in  the  prosecution  of  a  claim  of  $50,000,0  o 
against  Brazil  while  Blaine  was  Secretary  of  State  under  Gar- 
field,  which  claim  was  afterward  indignantly  rejected  by  Secre- 
tary Bayard.  .  .  . 

In  referring  to  these  matter-  I  do  not  speak  at  random,  but 
from  official  documents,  and  a-certained  facts  with  which  I  be- 
came familiar  during  my  public  service  of  four  years  in  that 
territory  under  the  last  administration. 

The  "  star  route  ''  fruu<l>  to  which  Julian  referred 
became  a  great  public  scandal  thirty  years  ago.  f'y 
means  of  them  the  L'nited  State.-  Treasury  was  robbed 
(if  large  sums.  The  term  "-tar  route"  was  used  to 
designate  interior  po-tal  route-,  on  which  the  mails  were 
carried  other  than  on  railroad-  or  by  steamboats.  These 
route-  were  officially  de-ignated  on  the  hooks  of  the 
I 'ostoffice  Department  by  a-terisk-  or  >tars,  thus  ;':,  hence 
the  term.  The  inve-tigation-  made  by  the  Pustoffice 
Department  and  bv  committee-  of  L'ongre-s  did  not  re- 
yeal  Klkin-  a-  a  contractor.  J  fi-  signature,  however, 
was  found  attached  to  the  bond-  of  certain  leading  pu.-ta) 
route  contractors  in  the  Southwest,  and  he  was  very  en- 
ergetic in  -ecuring  the  e-tabli-hment  of  overland  routes 


TIII-:  KLKIXS  FOKrrxK  335 

in  Xcw  Mexico  and  elsewhere.  U  was  conclusively 
established  that  he  was  interested  in  what  was  called  the 
"  Kerens  combination,"  the  ostensible  head  of  which  was 
Richard  C.  Kerens,  a  powerful  Republican  politician  of 
St.  Louis.  I  hit  so  astutely  and  covertlv  did  Elkins  work 
that  he  did  not  appear  at  all  in  the  great  "  star  route  " 
trials  in  1882  and  in  1883. ;!0 

KLKIXS     CF.TS     TIII-:     STAMP     OF    OFFICIAL     KKSPKCTA  RILIT  V. 

.By  this  time  he  was  a  noted  Republican  politician  of 
national  importance.  In  1884  he  was  chairman  of  the 
Republican  National  Committee  and  in  December,  1891, 
President  Harrison  appointed  him  Secretary  of  War. 
Harrison  was  not  ignorant  of  the  details  of  Elkins' 
career  in  Xew  Mexico,  for  while  a  United  States  Sena- 
tor, Harrison  was  a  member  of  the  Committee  on  Terri- 
tories, and  gave  particular  attention  to  the  affairs  in 
Xew  Mexico. 

I  larri-on  was  likewise  acquainted  with  the  facts  of 
the  Brazilian  claim.  This  was  an  alleged  claim  growing 
out  of  a  conce>sion  to  one  D.  (].  M.  Fewell  by  the  Brazil- 
ian Government  to  develop  certain  nitrate  deposit.-  on  an 
inland  off  the  Brazilian  coast.  Jewell  claimed  that  he 
had  fitted  out  a  ves-el  and  had  expended  £27.000  when 
the  Brazilian  Government  annulled  the  concession.  ]•"!- 
kins  became  attorney  for  Jewel!  and  filed  an  elaborate 

•""  The  charge  war-  iong  openly  made  that  the  rea-nn  why 
Klkins  was  not  hrouglu  to  trial  wa-  :hai  lie  had  secretly  turned 
state's  evidence,  ami  had  furnii-hed  the  Postmaster  General  vvii'i 
much  valuahle  information  aeain.-i  his  former  as-ociau-s..  S" 
far  a<  the  puhlic  records  are  cor.cerned,  no  documentary  or-oi"  of 
thi>  charge  can  he  found. 

Kerens,  i'  may  he  i  nted,  ci  i  'in;1  d  In-  career  a--  a  con- 
>yicuoiis  Reptni'.ican  politician  ai:d  wa-  appointed  Amh;:s-ador 
to  . \it.-iria  hv  President  Taft.  in  H)O<j. 


33^         HISTORY    OF    THK    (iRKAT    AMKKK'AX     I'ORTU  -\  F.S 

brief  in  tbe  State  Department  in  support  of  the  claim, 
and  calling  for  the  enormous  sum  of  $50,000,000  dam- 
ages. Elkins  tried  to  get  successive  United  States  Sec- 
retaries of  State  to  press  the  claim,  but  Secretary  Bayard 
fully  investigated  it  in  1886,  and  President  Cleveland  sent 
the  correspondence  to  the  Senate,  with  a  special  message 
which  closed  as  follows :  "  Such  an  egregious  claim  is 
an  outrage  upon  any  nation  with  which  the  United  States 
has  or  desires  to  have  friendly  relations.  I  have  de- 
clined to  receive  the  papers  or  send  any  communication 
to  Minister  Jan-is  on  the  subject." 

The  Maxwell  land  grant,  and  the  star-route  affair  were 
only  two  of  Elkins'  many  transactions  in  Xew  Mexico. 
Meanwhile,  he  had  married  the  daughter  of  United 
States  Senator  Henry  (/.  Davis,  a  millionaire  railroad 
and  coal  mine  owner  of  \Yest  Virginia.  Elkins  removed 
to  that  State.  With  the  millions  gathered  in  the  South- 
west, and  with  the  help  of  his  father-in-law's  many 
millions,  he  there  became  a  great  magnate,  getting  con- 
trol of  one  property  after  another.  He.  Kerens  and 
Davis  built  several  West  Virginia  railroads,  and  ob- 
tained control  of  coal,  coke,  oil  and  lumber  properties. 
Thev  also  financed  the  construction  of  railroads  in  Cali- 
fornia, Xevada  and  Utah.  Elkins  built  a  splendid 
castle-like  palace  in  the  town  bearing  his  name :  on  a 
mountainside  it  commands  a  view  of  peaks  and  val- 
leys for  thirty-five  miles.  In  1895  nc  was  fleeted  to 
the  United  States  Senate  by  the  West  Virginia  Legis- 
lature, after  a  campaign  in  which,  it  was  freely  charged. 
corruption  money,  in  the  form  of  campaign  funds,  was 
di>tributed  throughout  the  entire  State  to  insure  the 
election  of  members  favorable  to  his  plans.  In  the 
United  State-  Senate  Elkins  has  been  one  of  the  most 
adroit  and  useful  law-drafters  for  the  plutocracy.  One 


'nil'.    F.LKIXS    FORTUNE  337 

of  his  notable  acts  was  an  amendment  to  the  interstate 
commerce  act  expunging  the  clause  providing  imprison- 
ment for  violation  of  the  anti-rebating  law,  and  giving 
complete  immunity  to  magnates  who  testify  in  such  pro- 
ceedings brought  against  them. 

As  one  of  the  wealth  rulers  and  law  makers  of  the 
United  States,  Elkins  is  obviously  a  very  powerful  and 
distinguished  magnate.  Moralizcrs  may  well  contem- 
plate his  career,  and  consider  its  climax.  Were  the  sug- 
gestion even  facetiously  made  that  our  legislators  should 
be  elected  wholly  from  prison  constituencies,  it  would 
be  received  with  either  amazed  .shock  or  droll  levity, 
according  to  temperament.  And  yet,  it  should  cause 
neither  of  these  receptions,  for  have  we  not  seen  herein 
by  a  convincing  mass  of  facts,  that  Business  Society, 
after  all,  consists  so  largely  of  those  who  have  not  been 
found  out  and  punished,  and  those  who  have?  Such 
a  conclusion,  as  we  see,  is  no  exaggeration.  And  have 
we  not  also  seen  by  the  facts  that  the  great  despoilcrs 
become  the  dictators  of  the  very  communities  whom  they 
despoil ;  how  would  it  do  to  reverse  the  process  and 
elect  the  pettv  despoilers,  convicts  though  they  be,  as 
rulers?  'Twould  be  no  worse,  and  perhaps  better. 
Hut  neither  of  these  classes  can  be  condemned  for  the 
passions  and  crimes  which  the  system,  and  the  forces  of 
that  svstem,  generate  and  too  often  compel  ;  the  system, 
not  the  units,  stand-  the  need  of  change.  By  the  light 
of  this  fact,  and  this  alone,  Elkins'  career,  and  that  of 
all  like  him,  big  and  little,  should  be  considered. 


CHAPTER   XIV 
THE  HILL  FORTUNE 

Unsparingly  criticised,  and  frequently  assailed  with  ex- 
treme bitterness  in  his  early  career,  few  magnates  have 
been  the  subject  of  more  lavish  eulogy  in  his  latter 
years  than  James  J.  Hill.  As  his  wealth  and  power 
rapidly  grew,  and  he  became  a  multimillionaire,  and  dic- 
tator of  the  political  and  industrial  affairs  of  large  sec- 
tions of  the  United  States  and  Canada,  the  usual  trans- 
formation resulted.  He  ceased  being  the  familiar 
"Jim  "  Hill  derisively  -lurred  as  the  "Jay  Gould  of  the 
Northwest."  and  was  metamorphosed  into  the  great  Mr, 
Hill,  the  imposing  genius  of  stupendous  achievement.  A 
crowd  of  writers,  well  -chooled  in  the  extravagant  lan- 
guage of  sycophancy,  came  forth  to  proclaim  his  heroic 
proportions  as  a  master  mind  in  the  constructive  devel- 
opment of  the  country's  resources. 

For  full  thirty  vears  these  eulogies,  all  suspiciously 
alike  as  though  inspired  from  a  central  source,  have  con- 
tinuously appeared.  In  all  of  them  one  special  dithyranv 
bic  note  has  been  pressed.  With  infinite  rhetorical  vari- 
ation-, such  transcendent  terms  as  "  genius  of  transpor- 
tation "  and  "  intellectual  giant  "  have  been  freely  applied 
to  Hill.  Ingeniously  put  forward  under  manv  dictional 
disguises  and  artful  tricks  of  -tyle,  the  burden  of  these 
lays;  had  been  the  same  a-  that  so  much  remarked  in  the 
endless  panegyrics  of  the  Astors,  the  Vanderbilts,  J.  1'ier- 
pont  Morgan.  lilair.  Sage,  and  nearly  all  other  magnate-. 

338 


THE  HILL  FORTUNE  339 

Always  there  is  the  emphasis,  strongly  denoting  an  argu- 
ment for  a  client,  upon  Hill's  extraordinary  capaeity 
and  integrity  ;  how  he  obtained  every  dollar  of  his  vast 
fortune  honestly,  and  how  (it  is  specified)  corruption 
and  graft  have  been  conspicuously  absent  in  the  methods 
by  which  he  amassed  his  wealth.  One  steady  monoto- 
nous song  it  had  been,  varied,  in  long-separated  intervals, 
by  a  tirade  from  the  pen  of  some  unyoked  brother  —  a 
tirade  with  substance  of  truth,  but  lacking  estimate  and 
understanding. 

HILL'S  ENORMOUS  FORTUNE. 

The  extent  of  Hill's  fortune  is  enormous,  but  at  this 
writing  neither  the  exact  nor  approximate  number  of  his 
hundreds  of  millions  of  dollars  can  be  stated  with  any 
degree  of  accuracv.  hi  one  notable  respect  his  purlers 
do  not  misstate:  Hill  started  with  no  money  whatever. 
Now  that  he  has  a  colossal  fortune,  that  fact  of  itself 
should  be  provocative  enough  to  cause  deep  investigation  ; 
for  money  does  not  fall  like  rain  ;  it  must  be  garnered 
somehow  ;  and  while  millions  of  hard  workers  have  a 
difficult  enough  time  getting  a  sufficiency  for  their 
simplest  wants,  the  ease  with  which  one  man  has  pos- 
sessed himself  of  vast  storehouses  of  wealth  is  a  grave 
and  grim  fact,  well  calculated  at  the  outset  to  cause 
di-belief,  on  genera!  principles,  in  the  airy,  sweeping 
statements  of  Hill's  euli-gi-t-.  Hut  the  verv  fact  which 
should  at  once  arouse  questionings  and  originate  investi- 
gation is  converted  by  his  panegvrists  into  a  sublime 
ivihute —  into  a  conclusive  proof  of  hi<  remarkable 
power  of  demonstrating  him-elf  to  be  a  "self-made 
man."  \Ye  know  too  well  what  thi-  commercial  jargon 
of  the  dav  means;  not  a  man  with  intelligence,  ideals  or 


340      HISTORY  or  Tin-:  <;KK.\T  AMKKICAX  J-ORTI/M-S 

culture,  but  merely  one  of  wealth;  the  customary  bour- 
geois mind  can,  generally  speaking,  conceive  of  no  other 
kind  of  successful  man. 

If,  however,  wealth  can  be  used  interchangeably  with 
greatness,  then  Hill  is  a  truly  great  nabob.  He  owns 
or  controls  extensive  railroad  systems  in  the  Northwest 
and  West;  he  is  the  owner  of  vast  areas  of  land,  and  of 
mineral  deposits  the  fabulous  value  of  which  defies  cal- 
culation. He  is  the  possessor  of  steamship  lines  and  of 
many  other  kinds  of  property  ;  he  lives  in  a  virtual  palace, 
and  politicians,  editors,  clergy  and  judges  are.  his  puppets. 
Seeing  that  he  "began"-  — as  his  eulogists,  express  it  — 
without  money,  how  did  he  contrive  to  get  all  this  wealth? 
His  homage rs  do  not  explain  this  vital  question  ;  they 
unctuously  reel  out  dates  and  figures  and  glibly  relate 
when  he  obtained  this  or  that  property,  but  /zott'  he  really 
accomplished  the  process  they  tell  not.. 

Till-:  CHARACTKR  OF  TIIK   XORT  II  \\  K.ST\S  SKTTLEM  KXT. 

Hill  was  born  at  ( iuelph.  Canada,  in  1838,  and  mi- 
grated to  St.  Paul,  Minnesota,  in  1856.  The  environ- 
ment into  which  he  came,  as  a  youth  of  eighteen,  can 
easily  be  comprehended  after  a  reading  of  the  previous 
chapters.  The  Northwest  was  in  its  first  real  period  of 
settlement;  and  not  as  conventional  histories  have  it.  was 
this  settlement  wholly  made  by  "  stalwart  pioneers."  As 
a  matter  of  fact,  it  was  made  also  by  land-grabber-, 
timber  thieves,  gamblers,  trading  sharps,  cutthroats  and 
rogue>  in  general.  The  ru>h  to  get  land  grants,  mineral 
depoMts,  railroad  franchises  and  every  other  available  re- 
source, was  at  its  height.  "  [looms"  of  all  kinds  were 
projected;  a  horde  of  venal  individuals  swarmed  in  to 
preempt  whatever  they  could,  and  fleece  anybody  that 


TIU;  HILL  t-oKTixh  34 1 

they   could.     There   was   a   raging  mania   for   the   rapid 
acquisition  of  wealth,  regardless  of  the  means  used. 

True,  a  stream  of  agriculturists,  whose  sole  aim  was 
to  obtain  cheap  land  and  honestly  till  it,  poured  in.  But 
this  element  did  not  give  the  tone  to  the  general  charactcr 
of  the  activities.  The  real  aggressive  tone  was  imparted 
by  adventurers,  capitalistic  and  otherwise.  Practically 
all  of  these  capitalists  were  Easterners,  and  many  of 
them,  as  the  records  show,  had  been  engaged  in  swindles 
in  the  East.  Different  sets  of  them  were  busily  bribing 
Congress,  Government  officials  and  the  Legislatures  for 
land  grants,  railroad  charters,  franchises,  mineral  de- 
posits and  special  laws.  Sharp  merchants,  trading 
schemers  and  real  estate  hawks  overran  the  newly-settled 
towns  and  cities.  The  stamp  of  money  was  upon  every 
thought  and  plan  ;  the  pervading  ideal  was  wealth,  no 
matter  how  acquired;  all  classes  were  infected  by  it. 
Greed  was  in  the  very  air.  and  if  the  many  law-suit 
records  in  the  Minnesota  Courts  can  be  taken  as  an  indi- 
cation, jobbery,  swindling  and  cheating  were  a  very 
routine  performance  in  all  business  transactions. 

Hill  came  into  this  atmosphere  of  venality,  avarice  and 
corruption  ;  a  state  of  society  judging  every  man  by  the 
significant  question.  "How  much  is  he  worth?"  Long 
before  his  entry,  this  corruption  had  gained  full  headway. 
Throughout  the  whole  West,  Northwest  and  Southwest, 
the  fraudulent  seixure  of  agricultural,  timber  and  mining 
lands,  and  the  corruption  of  Congress  and  of  the  Legi^- 
laiure-  for  gratuitous  awards  of  public  money,  had  (  a- 
we  have  abundantly  ^een  in  previous  chapters")  long  been 
notoiious.  The  Common  Councils  of  the  cities  and  pub- 
He  office-  of  all  kinds  were  generally  filled  with  men  wlic 
converted  their  positions  into  a  means  of  securing  illicit 
revenue.  Firihed  or  otherwise  influenced  to  give  special 


342         HISTORY    OF    THE    GREAT    AMERICAN    FORTUNES 

franchises  and  privileges  or  connive  at  frauds  many  of 
these  men  left  offices,  paying  modest  salaries,  with  a  for- 
tune. 

THE    DEBAUCHING    AND     SWINDLING    OF     INDIANS. 

The  character  of  trade  in  the  West  and  Northwest 
had  been  determined  early  in  the  nineteenth  century  by 
the  operations  of  John  Jacob  Astor's  American  Fur 
Company  and  his  other  fur  companies.  Of  the  nature 
of  the  methods  by  which  Astor  laid  the  foundations 
of  the  fortune  of  820.000.000  which  he  left  at  his  death 
in  1848,  and  which  fortune  has  since  grown  to  be  one 
of  the  largest  in  the  world,  many  details  have  been  set 
forth  in  Volumes  1  and  II.  We  have  seen,  from  the 
official  record-,  how  he  systematically  debauched  numer- 
ous Indian  tribes  with  whiskey,  charged  them  incredibly 
extortionate  prices  for  cheap  merchandise  which  he  ex- 
changed for  furs,  and  pauperized,  and  spread  demorali- 
zation and  death  among,  the  Indians.  We  have  also 
seen  how  many  of  the  Indian  uprisings,  resulting  in  the 
murder  and  massacres  of  white  settlers,  and  in  the 
murder  and  punitive  shooting  by  the  traders  and  by 
the  vengeful  Indians  in  return,  were  originally  caused  by 
these  continued  practices  of  debauching  and  swindling. 
In  Volume  1  it  was  explained  that  many  additional  facts 
had  been  intentionally  left  out;  some  of  those  there 
omitted  will  be  described  here  in  order  to  contribute  to 
a  clearer  understanding  of  the  long-prevailing  trading 

hods  in  the  West  and   Xorthwest. 

I:  i-  clear  from  the  reports  of  the  United  States  army 

1   .     and  those  of  the  Government    Indian  Agent-  that 

rican   I'ur  Company  dominated  the  whole  of  the 

•.'vest    and     Xorthwest    fur    regions.     The    Government 


THE  HILL  FORT  i:  ML  343 

had  established  its  own  trading  posts,  called  factories 
or  agencies,  the  purpose  of  which  was  to  supply  the 
Indians  with  merchandise  in  exchange  either  for  furs  or 
land  or  to  relieve  their  de-dilute  condition  when  neces- 
sary. These  Government  muling  posts  were  strictly 
prohibited  from  dealing  in  or  supplying  liquor.  The 
American  Fur  Company  succeeded  in  undermining  the 
trade  of  these  agencies,  and  finally  in  causing  their  abo- 
lition. The  illegal  use  of  liquor  by  the  American  Fur 
Company  was  one  of  its  powerful  means  in  seducing 
the  Indians  fruin  the  Government  trading  posts  ;  another 
successful  method  was  by  prejudicing  the  Indians 
against  them  by  the  claim  that  the  Government  mer- 
chandise was  inferior.  In  representing  to  the  Govern- 
ment at  Washington  that  the  Government  trading  posts 
did  little  business,  .Matthew  Irwin,  I".  S.  Indian  Agent, 
at  Green  Bay.  Wisconsin,  wrote  that  two  of  the  reasons 
for  this  state  of  affairs  were  because  of  the  secret  prac- 
tice on  the  part  of  private  traders  in  vending  whiskey, 
and  because  of  ihe  prejudice  excited  among  the  Indians 
against  the  Government  agencies.  (  Doc.  Xo.  60,  First 
Session.  Seventeenth  Congress,  p.  60.)  In  a  communi- 
cation, dated  February  22.  uS22,  to  Senator  Johnson, 
chairman  of  the  V.  S.  Senate  Committee  on  Indian 
Affairs,  Thomas  L.  McKenney,  V.  S.  Superintendent  of 
Indian  Trade,  wrote  that  the  agent-  of  the  American 
Fur  Company  "  had  a  great  deal  at  slake  in  overturning 
these  establishments  (the  Government  trading  posts) 
and  has  much  more  at  -lake  in  the  overthrow  of  the 
entire  system."  Superintendent  McKenncy  wrote  point- 
edly in  ihe  "haste  ol  the  American  Fur  Company  to 
gra.-p  the  trade  with  our  Indian-."  i  Doc.  Xo.  (>o.  p.  42.  i 
\\ritmg  from  Camp  Missouri.  Missouri  River,  to 


344      insTokY  OF  mi-:  CKKAT  AMERICAN   L'ORTCNKS 

Colonel  li.  Atkinson,  on  October  29,  1819,  Major 
Thomas  Biddle  gave  this  description  of  the  private 
traders : 

These  traders  are  continually  endeavoring  to  lessen  each  other 
in  the  eyes  of  the  Indians,  not  only  by  abusive  words,  but  by 
all  sorts  of  low  tricks  and  maneuvers.  If  a  trader  trusts  an 
Indian,  his  opponent  uses  all  his  endeavors  to  purchase  the 
furs  he  may  take,  or  prevent  in  any  way  his  being  paid ;  each 
trader  supports  his  favorite  chief,  which  produces  not  only 
intestine  commotions  and  dissensions  in  the  tribe,  but  destroys 
the  influence  of  the  principal  chief,  who  should  always  be 
under  the  control  of  the  Government.  The  introduction  of 
ardent  spirits  [whiskey,  etc.]  is  one  of  the  unhappy  conse- 
quences of  this  opposition  among  traders;  so  violent  is  the 
attachment  of  the  Indians  for  it,  that  he  who  gives  most  is 
sure  to  obtain  furs ;  while,  should  any  attempt  to  trade 
without  it.  he  is  sure  of  losing  ground  with  his  antagonist. 
Xo  bargain  is  ever  concluded  without  it.  and  the  law  on  the 
subject  i?  evaded,  by  their  saying  they  give,  not  sell  it. 

Parenthetically,  a  reply  made  by  Major  John  Biddle 
to  one  of  the  interrogations  addressed  to  him  by  Sena- 
tor Johnson  may  be  properly  interposed  here : 

Question  /J1.  Are  the  Indian.-  judges  of  the  quality  of  good- 
in  which  they  trade,  of  the  reasonableness  of  prices,  and  of 
the  value  of  their  own  furs  and  peltries? 

Answer.  The  Indians  are  very  observant,  and  reputed  to  li- 
very good  judges  of  the  articles  which  they  are  accustomed  to 
buy.  Their  capacity  for  the  petty  traffic  which  they  carry  or. 
i-  believed  tn  be  much  greater  than  i?  generally  apprehendi'i 
!  he  principal  fraud  practiced  upon  them  is  believed  to  be  n 
the  article  of  spurious  liqu'>r>:  tn  ichich  the  seller  attaclies 

•  •  the  penalty  lie  ici'itld  incur  from  deteeti.": 
i  Doc.   Xo.   do.   p.    -   i 

i<>  resume  Major  Thomas  Middle's  communication  tn 
(  i'loncl  Atkinson:  lie  wrote  further  that  when  tlv.1 
trader-  ln.ncrht  furs  after  an  Indian  hunt  "a  keg  of 


THE    IIII.L    FOKTfXK  345 

whiskey  was  considered  an  indispensable  equipment  oi 

Mich    an    undertaking."     He    closed    his    communication 
with  the  following  remarks : 

1  had  found  on  my  arrival  [at  the  Maha  nation  of  Indians] 
most  of  the  principal  men  drunk.  The  Big  Elk.  who  is  so  much 
our  friend,  and  who  formerly  possessed  unlimited  power  in  his 
nation,  was  so  drunk  for  two  days,  that  I  could  not  deliver 
your  letter  to  him  ;  when  I  gave  it,  I  requested  an  interpreter 
to  inform  him  that  I  had  been  two  days  waiting  to  deliver  a 
letter  from  you,  but  that  very  much  to  my  surprise,  I  had  found 
him  too  drunk  to  transact  business.  He  appeared  affected  at 
what  I  said,  acknowledged  how  unworthy  it  was  in  him  to 
be  in  that  situation,  and  admitted  he  had  lost  much  power  by 
it.  He  blamed  the  whites  for  bringing  liquor  into  the  coun- 
try, said  when  he  knew  it  was  not  to  be  had  he  felt  no  incli- 
nation for  it,  but  that  when  it  was  near  and  attainable  hi> 
attachment  for  it  is  irresistible.  .  .  . 

Thus  is  the  influence  of  this  valuable  and  sensible  Indian  IOM 
to  his  tribe  and  the  Government,  and  thus  is  a  man  who  pos- 
sesses some  traits  that  do  honor  to  human  nature,  debased  and 
made  a  beast  of.  (Doc.  Xo.  60,  pp.  46,  47.) 

Document  Xo.  60,  First  Session.  Seventeenth  Con- 
gress, includes  this  extract  from  a  letter  from  the  U.  S. 
Indian  Agent  at  (ireen  Ray,  Wisconsin,  to  Mr.  McKen- 
ney,  U.  S.  Superintendent  of  Indian  Trade: 

The  fact  can  be  e-tabli-lu'd  that  in  almost  every  case  the 
persons  engaged  [as  traders]  by  Mr.  Astor's  principal  agent. 
Mr.  Crooks  (who  is  a  British  subject),  were  known  Briti-!; 
subjects;  many  of  them  having  held  commissions  under  i!; 
British  Government  and  headed  Indians  during  ih<-  hue  u  • 
[that  of  1812-15].  For  example,  at  this  place  Mr.  Astor  sent 
goods  to  the  following  persons,  la-t  fall,  to  be  traded  along-iiK 
the  factory  [Government  agemy]: 

JOHN  LOWE,  British     subjects    and    holding    com 

the   Briti>h  Govern 
Indian     Department 
T   war. 


FllSTORY    OF    THE    GREAT    AMERICAN     FORTUNES 

And  the  following  persons  were  sent  by  Air.  Astor  in  the 
neighborhood  of  Mr.  Rouse,  whom  1  sent  to  do  business  with 
the  Indians  at  the  Ouisconsin  [Wisconsin]. 

PETER  GRIGNON,  [ British  subjects  belonging  to  this  place, 

MR.  JACOBS,  and   holding  commissions,  during  the 

MR.  CHAPEREAX.  and  1  late  war,  from  the  British  Govern- 
J.  B.  GRIG.XON,  ment,  in  the  Indian  Department. 

And  Mr.  Lusienaux  (a  British  subject)  was  sent  by  Mr. 
Astor  to  trade  with  the  Indians  at  Winnebago  lake.  At 
Menominee  river,  where  I  sent  Mr.  Thomas  P.  James  to  trade, 
he  was  opposed  by  a  Canadian  sent  by  Mr.  Astor;  and  in  an 
underhand  manner  by  Peter  Powell,  a  British  subject  who  held 
a  commission  in  the  Indian  Department  during  the  late  war. 

A  description  followed  of  the  secret  traffic  in  whiskey 
carried  on  bv  A>tor's  agents,  with  the  explanatory  state- 
ment that  "  it  •i'.' as  deemed  illegal  to  accept  Indian  testi- 
mony." In  other  words,  Indians  could  he  indiscrimi- 
nately debauched,  swindled,  plundered  and  murdered, 
as  we  have  seen  in  Vol.  1,  and  yet  their  testimony  in 
civil  or  criminal  suit-  -^'as  not  considered  legal.  The 
communication  further  described  how  Astor  caused 
hone>t  official-  who  expo-ud  his  method?  and  sought  to 
prevent  them  to  he  dismissed  from  office  (see  note  on 
page  84,  Vol.  II,  of  this  work)  and  continued: 

It  appears  that  the  commanding  officer  at  Prairie  du  Chien 
undertook  at  the  instigation  of  the  Indian  agent,  to  stop  and 
-end  to  St.  Louis  some  of  Mr.  Astor's  British  trading  subjects. 
:  or  this  act  it  is  said  the  agent  will  be  dismissed  from  the 
public  service;  and  we  now  have  the  novel  spectacle  before  us 
of  a  British  -ub.iect  ('Mr.  Crooks)  traveling  to  the  Prairie,  with 
a  passport  from  Governor  Cass.  said  to  be  given  by  authority  of 
•i .-.  War  Departn:'.-ni.  to  inquire  ir.to  the  conduct  of  the  Indian 
nd  ci  imtnanding  <  >fncer. 

1'he  I  a?s  referred  to  was  the  same  Lewi-  Cas>.  who. 


Tllli    HILL    FORTt'XL  347 

as  has  been  noted  in  Vol.  1,  received  $35,000  from  Astor, 
for  services   not   stated. 

On  January  14,  1822,  Senator  Johnson  laid  before 
the  United  States  Senate  a  long  communication  (Doc. 
Xo.  10)  regarding  Astor 's  American  Fur  Company 
from  Superintendent  of  Indian  Trade  AlcKenney,  who 
wrote  of  "  the  keen  and  adventurous  trader,  skilled  in 
the  arts  of  deception  and  speculation,  who  is  bent  on 
making  gains,"  and  how  "  the  consequences  to  the  In- 
dians are  notorious  ;  and  these  involve  bereavement,  and 
suffering  and  death!"  McKenney  referred  feelingly  to 
"  the  sight  of  that  intellectual  and  moral  degradation  to 
which  such  a  traffic  necessarilv  dooms  this  unfortunate 
race  of  men."  and  described  the  trade  as  "  essentially 
degrading  in  its  character,  and  disastrous  in  its  conse- 
quences, for  it  is  the  principal  business  of  such  traders 
to  oppose  everything  like  improvement.  Such  is  the 
likeness  which  is  stamped  deep  upon  our  Indians,  and 
which  may  be  traced  out  in  all  of  the  poverty  and 
misery  which  invests  so  large  a  portion  of  their  popu- 
lation. History  details  the  causes  ;  and  these  are  to  be 
found  in  the  superior  intelligence  and  keen  avarice  of 
the  one  party,  and  their  disregard  to  political  and  moral 
order :  and  the  unenlightened  and  dependent  condition 
<>f  the  other."  McKenney  went  on: 

.  .  It  cannot  be  admitted  as  a  just  view  of  the  Indian 
character  and  manners  to  pronounce  upon  his  treachery  and 
cruelty  a?  the  characteristics  of  his  moral  constitution.  These 
wily  acts  are  rather  the  results  of  his  best  conceptions  of  de- 
fence, and  of  preserving  himself  from  the  treachery  which  is 
practiced  upon  him;  and  the  displays  of  his  vengeance  are  but 
the  ebullitions  of  a  provoking  temper.  \Ve  see  the  Indian 
i;oadoi  into  desperation  by  iniu-tice  and  fraud.  .  .  . 


34^         HISTORY    OF    Till-;    GKKAT    AMERICAN    FOKTUNKS 

G.  C.  Sibley,  L".  S.  Indian  Agent  at  Fort  Osage,  wrote, 
on  April  16,  1819,  to  Superintendent  McKenney,  de- 
nouncing the  attempts,  chiefly  on  the  part  of  the  Ameri- 
can Fur  Company,  to  bring  about  the  abolition  of  the 
( Government  trading  posts.  With  bitterness  he  wrote 
that  "  The  clamorous  cupidity  of  the  traders  will  no 
longer  be  restrained;  the  Indian  trade  must  be  given  up 
to  '  individual  enterprise  ' ;  to  merciless  men  ...  to 
unprincipled  pioneers  of  commerce  of  every  -hade  and 
hue."  If  that  should  be  done,  he  pointed  out,  an  address 
along  these  lines  might  as  well  be  made  to  the  settlers : 
"  Your  property  will  be  sacrificed  ;  your  families  mur- 
dered, and  your  farms  desolated;  but  these  men  insist 
upon  their  right.-,  and  the  fur  trade  must  be  left  open  to 
them.  .  .  .  What  is  the  bleeding  scalp  of  an  infant, 
compared  with  the  rich  fur  of  a  beaver  skin?"  (Doc. 
Xo.  60,  pp.  57-59.) 

All  of  these  protests  were  of  no  avail :  by  a  cam- 
paign of  persistent  misrepresentation,  wire-pulling  and 
presumably  bribery,  A.-tor  finally  succeeded  in  having 
the  Government  trading  posts  abolished,  and  thereafter 
could  debauch  and  swindle  the  Indian  tribe-  without 
any  competition  in  trade  from  the  Government.  But 
while  denouncing  A-tor,  and  justly  so,  for  his  extraor- 
dinarily revolting  practices,  the  United  State-  Indian 
Agents  might  well  have  denounced  themselves  for  vir- 
tuallv  defrauding  the  Indians  in  the  purchase  for  the 
Government  of  vast  areas  of  lands  owned  by  the  In- 
dian-. Superintendent  McKenney  stated  that  these 
land.-  had  cost  the  Government  an  average  of  only  tie  a 
cents  an  acre!  I'-^'o  cents  an  acre,  so  it  is  written  . 
the  Indian-;  were  often  paid  this  sum  in  merchandise. 
Much  of  the  poverty,  and  nearly  all  of  the  debauchery, 
-windling.  murder-  and  massacres  could  be  right- 


THI-:    Hll. I.    lORTL'NK  349 

fully  charged  to  Astor,  but  the  (iovcrnment  itself  was 
responsible  for  some  of  the  destitution  in  thus  taking 
advantage  of  the  unsophisticated  Indians  and  wheedling 
away  their  valuable  agricultural,  timber  and  mineral 
lands  for  virtually  nothing.  And,  as  we  have  seen,  capi- 
talists then  promptly  stepped  in  and  fraudulently  secured 
great  stretches  of  these  timber  and  mineral  lands,  while 
.sections  of  the  working  class  were  vainly  petitioning 
Congress  to  give  the  workers  cheap  access  to  the  soil, 
or  to  hold  the  land  as  national  property,  for  the  benefit  of 
the  whole  people. 

The  bribery  of  Government  agents,  in  all  departments, 
by  capitalists  determined  upon  defrauding  the  Govern- 
ment, the  Indians,  inventors  and  the  producers  in  general, 
was  persistent.  In  Chapter  J,  Vol.  II,  facts  have  been 
given  of  the  corrupt  collusion  of  land  office  registers 
and  receivers  by  which  capitalists  obtained  immense  tracts 
of  land.  Many  of  the  Government  agents  among  the 
Indian  tribes  were  likewise  corrupted,  either  by  money 
r> r  other  means.  Numerous  Congressional  investigations 
conclusively  established  this  fact.  An  investigation,  in 
1842,  of  the  frauds  practiced  during  the  previous  dec- 
ade or  more  upon  the  Cherokees,  for  instance,  revealed 
such  an  elaborate  system  of  fraud  on  the  part  of  private 
contractors  in  the  contracts  for  supplies,  that  a  powerful 
attempt  was  made  to  suppress  the  report.  The  I  louse 
Committee  on  Indian  Affairs  declined  to  yield  to  the 
influences  demanding  suppression,  and  published  the  re- 
port in  full.  (Report  Xo.  271.  February  25.  1843. 
Twenty-seventh  Congress.  Third  Session.)  The  report 
of  the  investigation  consisted  of  two  sections,  the  first 
of  which  gave  a  description  of  the  Cherokees.  In  it» 
own  report,  the  Rouse  Committee  on  Indian  Affairs  thus 
reported  in  part  : 


35O        HISTORY    Ol-    Till-:    GKK AT    AMERICAN    FORTUNES 

'I'hc  second  report  relates  to  frauds  alleged  to  have  been 
>  oinmitted  upon  the  Government  and  the  Indians,  by  certain  sub- 
< nlinate  agents  in  the  public  employment,  and  persons  who  had 
contracted  with  the  Government  to  furnish  subsistence  to  a 
number  of  tribes.  This  report  presents  a  great  amount  of  facts 
on  the  subject,  showing  that  the  most  exorbitant  prices  were 
paid  to  the  contractors  who  furnished  the  rations.  The  man- 
lier in  which  the  contracts  were  made  is  pointed  out,  as  well 
cts  the  manner  :;,  which  they  were  performed;  and,  unless  the 
statements  are  false,  i-  i:;  ,-vide;.t  that  the  Government  was  de- 
frauded in  the  nr-.;  instance,  and  the  Indians  in  the  second;  and 
that  in  bm!;  the  :•-.• .'-  '.  vernment  participated. 

The  facts  contained  in  ti:o  report  are  very  valuable.  They 
expose  the  whole  machinery  of  fraud,  by  which  the  Govern- 
ment and  Indians  have  been  so  often  and  so  greatly  wronged. 
The  inquiry  by  Lieutenant  Colonel  Hitchcock  appears  to 
have  been  conducted  \\ith  great  intelligence  and  fairness.  .  .  . 

Xorth  and  south,  east  and  west,  this  defrauding  of 
Government  and  Indians  continuously  went  on. 


The  thefts  of  mineral  lands  in  \Yisconsin,  Illinois, 
Iowa,  Michigan  and  other  States  were  so  scandalous  a 
condition  by  the  year  1840,  that  successive  Congressional 
Committees  were  moved  to  report  extensively  upon  them. 
The  House  Committee  of  Public  Laud-  reported,  on 
December  18,  1840,  that  large  tract-  of  land,  well  known 
to  be  rich  in  mineral  deposit-,  in  the  Xorthwest  and  el-e- 
where.  had  been  fraudulently  seized  under  nominal  forms 
of  law.  and  that  deception,  perjury  and  fraud  were 
common.1 

Two  vears  later,  on  April  I.  1842,  the  Ilou-e  Com- 
mittee on  Public  lands  submitted  a  similar  elaborate 
report,  containing  a  petition  from  citi/cn-  of  variou- 


THK    HII.I.    l-'OKTl'NK  351 

Western  and  Northwestern  States  complaining  that  the 
oldest  and  most  valuable  mines  had  been  fraudulently 
seized  "  and  that,  too  at  the  very  time  when  the  regular 
miners  were  occupying  the  same,  and  were  deriving  their 
livelihood  from  them."  The  committee  described  main- 
cases  of  perjury  or  fraud  in  the  seizure  of  lead  and 
copper  mines,  and  many  facts  were  brought  out  showing 
that  the  bribery  of  Land  Office  officials  and  army  officers 
was  a  regular  part  of  the  fraudulent  operations. 
"  Redress  through  the  courts  of  ordinary  jurisdiction," 
the  report  read  "  is  slow  and  expensive.  The  persons 
aggrieved  are  generally  men  poor  in  purse,  living  by  their 
labor,  and  they  have  not  the  means  to  contend  in  court 
with  the  wrongdoers."  - 

A  report,  dated  January  27,  1846,  of  the  Senate  Com- 
mittee on  Public  Lands,  in  answer  to  a  resolution  of  in- 
quiry of  the  United  States  Senate  as  to  the  character  and 
disposition  of  the  Lake  Superior  mineral  regions,  pointed 
out  that  that  region  "  lias  within  the  two  or  three  pa-t 
years  risen  into  great  importance  in  the  public  e-tirna- 
tion."  The  committee  declared  itself  fully  persuaded 
that  its  copper  mines  were  very  valuable,  and  that  under 
proper  management  the  mines  might  become  a  prolific 
source  of  income  to  the  Treasury  of  the  I'nited  State--. 
The  committee  described  the  great  fraud-  by  winch  largp 
areas  of  these  mineral  deposits,  located  on  public  domain. 
were  pas-ing  into  private  hand-." 

Krequent  Congressional  reports  told  of  the  fraudulent 
methods  by  which  immensely  valuable  mineral  deposits 
in  the  \orth\ve-t  were  robbed  from  the  Indian-,  and  the 
(  ioverntnent  Dwindled.  The  House  Committee  on  Indian 


352          HISTORY    OF    THI£    GREAT    A.MKKICAX     FORTUNES 

Affairs  reported,  for  example,  on  April  11.  1874.  that  a 
treat}-,  signed  in  1854,  between  the  United  States  and  a 
branch  of  the  Chippewa  Indians  gave  that  tribe  a  reser- 
vation in  Michigan.  "  In  1869,"  the  report  continued,, 
"some  speculators  in  public  lands  discovered  valuable 
minerals  in  the  township,  fifty-one  [part  of  the  Chippewa 
reservation.]  They  immediately  went  to  work,  while  the 
secret  remained  theirs,  to  have  it  restored  to  market. 
The}'  finally  succeeded  so  far  as  to  induce  the  Govern- 
ment to  restore  to  market  so  much  of  the  township,  by 
far  the  larger  and  more  valuable  portion,  as  lies  east  of 
Huron  Bay."  The  report  declared  that  the  Indians  had 
been  unjustly  dealt  by  and  wronged,  and  the  mineral 
lands  fraudulently  acquired.  This  was  but  one  of  many 
Mich  reports  dealing  with  the  theft  of  mineral  lands 
from  that  tribe  and  other  Indian  tribes. 


The  huge  fraudulent  operations  in  the  theft  of  timber 
from  the  public  domain  in  Minnesota  and  other  States 
and  Territories,  and  the  bribery  of  public  officials  to  con- 
nive at  those  thefts,  were  another  example  of  the  wide- 
spread and  permeating  fraud. 

Congress  had  passed  an  explicit  act  prohibiting  depre- 
dation- on  the  public  timber  lands,  and  providing  a 
penaltv  for  each  violation  of  the  law  of  a  fine  of  not  less 
than  triple  the  value  of  the  timber  cut,  destroyed  or  re- 
moved, and  a  term  of  imprisonment  not  to  exceed  twelve 
months.  This  law  was  effectively  ignored  or  evaded  by 
individual  lumber  capitalists  or  lumber  corporations.  In 
a  long  report,  under  orders,  to  I  nited  States  Secretary  of 


THE    HILL   FORTL'XK  353 

the  Interior  Robert  AlcQelland,  on  February  12,  1854, 
James  B.  Estes,  U.  S.  Timber  Agent  for  Iowa,  Minnesota 
and  the  Western  district  of  Wisconsin,  stated  that  in  one 
Minnesota  section  alone  —  the  Clack  River  district  — 
more  than  two  hundred  million  feet  of  pine  had  been  cut 
and  carried  away.  "  On  the  Black  River,"  wrote  Estes. 

are  sixteen  lumbering  mills,  ail  of  \vhich,  until  the  last  year 
have  been  .supported  by  logs  taken  from  the  public  lands." 

L'pon  the  Chippe\va  and  Red  Cedar  or  Mcnominec  rivers,  the 
s-..iie  state  of  waste  exists  and  has  been  carried  on  for  a  number 
of  years.  There  are  also  upon  these  streams,  and  their  branches, 
eight  saw  mills  which  doubtless  cut,  as  an  average,  more  than 
two  millions  of  feet  a  year.  The  amount  of  lumber  cut  at  all  01 
these  mills  is  small  compared  with  the  actual  waste  upon  the  pub- 
lic lands,  as  there  is  now,  and  has  been  for  years,  a  most  exten- 
sive business  of  '"logging"  carried  on  to  supply  the  lower  mar 
kets  of  the  Mississippi." 

.Along  certain  rivers  besides  those  named,  Estes  added, 
there  were  "  nineteen  saw  mills,  of  steam  and  water 
power,  which  are  engaged  in  cutting,  and  doubtless  con- 
sume, fortv  or  fiftv  millions  feet  of  lumber  yearly.  In 
addition  to  this,  there  has  been  a  large  traffic  in  rafting 
logs  down  the  Mississippi  to  the  St.  Louis  and  other 
markets  below."  " 


This  immense  amount  of  lumber  was  almost  all  stolen. 
Usually  the  ( iovernment  timber  agents  were  bribed  to 
wink  at  thi-  colossal  system  of  fraud,  and  at  other  time- 
th'.'v  were  likewise  bribed  to  <ell  <  what  they  had  no  legal 


354          HISTORY    ()];    THK    GRF.AT     AMERICAN     FORTUNES 

authority  to  sell)  permission  or  licenses,  for  insignificant 
payments  to  the  Government,  to  cut  timber  from  the 
public  lands.  Kstes  reported  that  he  had  instituted 
twenty-one  indictments  against  some  of  these  timber  tres- 
passers, and  that  among  the  number  he  had  caused  to  be 
indicted,  was  Stunton,  a  former  I  nited  States  Timber 
Agent.  "  for  being  accessory  to  those  trespassers,  in  hav- 
ing sold  to  individuals  permissions  to  cut  and  waste."  8 

So  intrenched  was  this  system  of  enormous  theft  that 
when  one  honest  Government  official  attempted  to  en- 
force the  law,  the  whole  lumbering  interests  sought  to 
discredit  him  and  his  aim  and  bring  alxmt  his  removal. 

Such  a  practice  had  long  been  the  usual  capitalist 
method  of  reprisal  ;  we  have  seen  how  Astor,  earlier  in 
the  century,  caused  official-  who  tried  to  stop  his  debauch- 
ing and  swindling  of  the  Indians  to  be  dismissed  from 
office,  and  we  have  noted  the  same  occurrence  so  repeat- 
edly, that  it  might  be  said  to  be  a  fixed  accompaniment  of 
capitalist  plans.  Fternally  boasting  of  their  concern  for 

law  and  order  "  when  labor  union-  declared  a  strike, 
and  demanding  the  strict  enforcement  of  the  laws  when- 
ever that  enforcement  had  to  do  with  the  working  class, 
the  capitalists,  on  all  occasions,  insisted  upon  their  right 
to  interpret  laws  as  they  willed,  and  evade  or  violate  them 
if  their  -elf  interest  so  pleased  them. 

F.ven  further:  not  only  did  the  lumber  capitalists 
-ystematically  seek  to  thwart  the  enforcement  of  the  law 
by  honest  official-;  all  of  the  allied  capitalists  in  the 
-ame  region,  and  -ub-idixed  newspaper  owners  and  hire- 
ling- joined  in  threatening,  and  often  using,  force  to  pre- 
vent the  law-  from  being  executed.  This  is  clearly 
-ho\vn  by  the  report  made  on  February  18,  1854.  by  I.  \V. 
\Yillard,  T.  S.  Timber  Agent  for  Western  Michigan. 


THE    HILL    FORT  TNI-:  355 

to  United  Stales  Secretary  of  the  Interior  McClelland. 
\Yillard  estimated  that  "  there  have  been  manufactured 
and  shipped  from  there  [the  region  north  of  Grand 
River  and  Lake  Michigan]  more  than  five  hundred  mil- 
lion feet  of  lumber  within  the  last  ten  years,  and  more 
than  seven-eighths  of  which  was  plundered  from  the 
public  lands.  .  .  .  Besides  this,  the  extensive  tanner- 
ies of  Chicago  and  Milwaukee  have  been  largely  supplied 
with  bark  from  the  forests  of  hemlock  on  the  eastern 
Miore  of  Lake  Michigan."  9 

IIOXF.ST    OFFICIALS    MALIf.XF.D    AXD    PFRSFCUTFI). 

Willard  caused  thirty-seven  of  the  trespassers  to  be 
indicted.  Then,  he  wrote,  "  the  entire  timber  interests 
commenced  a  systematic  war  upon  me.  The  newspapers 
at  Chicago,  it  is  believed,  at  the  instance  of  the  tres- 
passes, their  attorneys  and  agents,  contained  attacks  daily 
upon  the  agent,  characterizing  his  conduct  as  oppressive 
in  the  extreme,  and  the  '  Chicago  Tribune  '  went  >o  far 
as  to  counsel  resistence  by  force.  Meeting-  were  held 
in  the  lumber  region-,  attended  by  lumber  merchants 
from  Chicago  in  some  instances,  at  which  violent 
harangues  were  made,  and  resolutions  adopted,  the 
lemper  of  which  was  well  calculated  to  excite  a  feeling 
leading  to  -he  mo-t  dangerous  consequences.1'  In  fact, 
the  timber  capitalists  emploved  armed  gangs  to  prevent 
the  seixure  of  the  stolen  lumber,  and  fleets  of  lake  ships 
were  requisitioned  to  carrv  off  the  lumber  hv  -'ealth  he- 
fore  the  Government  agents  could  arrive  to  confiscate  it. 

What  eventually  happened  to  those  thieves?  Invaria- 
bly thev  'Taduallv  succeeded  in  forcing  the  honest  Gov- 


eminent  timber  and  land  officials  out  of  office.  They 
/might  the  Government  by  force  and  strategy,  and  con- 
tested it  in  the  courts.  The  plea  was  set  up  by  them  that 
timber  was  not  a  part  of  the  land,  and  for  years,  the  courts 
solemnly  considered  the  question  whether  a  tree  went 
with  the  real  estate.  Finally,  the  Supreme  Court  of  the 
L'nited  States  gravel}-  decided  that  it  did ;  that  "  the 
timber  while  standing  is  a  part  of  the  realty,  and  it  can 
only  be  sold  as  the  land  could  be.  and  unless  lawfully 
cut.  will  remain  the  property  of  the  United  States."  n 
A  few  of  the  underlings  of  the  lumber  capitalists  were 
detained  in  jail ;  as  for  the  capitalists  themselves,  they 
were  allowed  by  the  Government  "to  compromise"  the 
cases  against  them,  by  payment  of  trivial  sums.  Xo  poor 
man  violating  the  law  had  ever  been  permitted  to  com- 
promise with  the  (ioverninent:  lie  had  to  face  a  court 
mandate  and  go  to  jail  and  stay  there  until  his  sentence 
expired.  1'ut  the  timber  capitalists,  like  all  other  sections 
of  the  capitalist  class,  were  allowed  to  keep  the  fruit  oi 
their  thefts,  and  buy  immunity  from  the  penalties  of 
the  law  by  paying  back  a  very  small  part  of  the  pro- 
ceeds. With  these  proceeds  the  timber  thieves  often  then 
bribed  legislatures  for  privileges  and  franchises,  bought 
stocks  and  bonds,  and  real  estate  in  the  cities,  built  fine 
mansions  and  became  the  founders  of  some  of  the  con- 
siderable fortunes  in  the  United  States.  And  continu- 
ously, decade  after  decade,  the  gigantic  thefts  of  timber 
from  the  public  lands  went  on  unceasingly.12 

11  I*.    S.   vs.    Cook,    Wallace's    Reports.    Supreme   Court   of   the 
!    r.iiul    States,  xix  :  591. 

-  Tiie   voluminous    reports   on   the   subject    issued   by  the   Gen- 
eral   [.and   Oftice   in    1877,   s-hu-vv   that   the  most   extensive  timber 
depredations   \vere   still   going   on   in   Minnesota,   Michigan,   \Yis 
roi>in,    I.oniM.-ma,   Alabama,    Florida   and   other    States,   and   that 
Government  timber  agents   \\xre   being  bribed,   or  otherwise   in- 


Tin;  HILL  FORTUNE  357 

These  are  a  very  few  instances  of  the  methods  in  the 
seizure  of  mineral  deposits  and  timber  throughout  the 
Northwest  long  before,  or  at  about  the  time,  Hill  ap- 
peared on  the  scene.  In  fact,  it  might  be  said  that  when 
he  arrived  in  St.  Paul,  fraud  as  the  foremost  means  to 
success,  had  already  become  traditional.  The  remarkable 
frauds  by  which  many  millions  of  dollars  were  stolen  bv 
Russell  Sage  and  others  in  the  projection  and  manipu- 
lation of  the  St.  Paul  and  Pacific  railroad  were  carried 
on  under  Hill's  eyes.  Very  probably  lie  learned  his  first 
great  lesson  from  observing  Sage's  methods,  and  it  was 
this  very  railroad  that  he  and  his  partners  obtained,  after 
Sage  had  plundered,  and  practically  abandoned,  it. 

THI.C    HISTORY    OF    A    RAILROAD    HILL    SHCU  RKU. 

The  history  of  this  railroad  was  one  of  continuous  cor- 
ruption from  its  inception.  The  facts  have  been  given 
in  one  of  the  chapters  on  the  Sage  fortune,  but  a  re- 
capitulation will  be  here  summarized. 

The  attempted  corrupt  seizure  of  public  lands  in 
Minnesota  began  in  1^54.  when  an  act  was  corruptly 
lobbied  through  Congress  indirectlv  giving  nine  hundred 
thousand  acre-  of  public  domain  to  the  Minnesota  and 
Northwestern  Railroad  Company.  The  ensuing  pubhe 
scandal  compelled  the  repeal  of  that  act.  I'.ut  other  act- 
were  passed  by  Congress  in  [^57.  by  the  same  proved 
methods  of  briber}-,  indirectly,  yet  absolutely,  giving  a 
present  of  six  million  acres  of  public  land  in  Minnesota 
to  various  railroad  corporations. 

One  of  these  mea-ures  of  Congress,  approved  on 
March  3.  1^7.  made  a  large  land  grant  to  the  Territory 


35&       HISTORY    OK    Till:    GREAT    AMERICAN    FORTi   NES 

ol  Minnesota  for  the  benefit  of  the  Minnesota  and 
Pacific  Railroad  Company.  The  further  history  of  this 
railroad  has  heretofore  been  specifically  described  ;  how 
its  projectors  were  composed  of  notorious  lobbyists  and 
swindlers;  how  they  corrupted  the  Minnesota  Legislature 
to  award  them  "  as  aid  "  several  millions  of  dollars  of 
State  bonds ;  how  they  fraudulently  sold  and  hypothe- 
cated large  amounts  of  those  bonds  and  stole  the  pro- 
ceeds ;  and  how.  although  they  had  received  millions  of 
acres  of  public  lands,  and  millions  of  dollars  of  public 
money,  yet,  by  1859,  they  had  not  built  more  than  a 
few  miles  of  worthless  track.  More  millions  of  dollars 
had  been  stolen  by  palming  off  >t(>ck  on  farmers,  mer- 
chant- anil  other  investing  dupe>. 

The  robbery  of  these  huge  sum-  threw  the  railroad 
company  into  insolvency.  Then  in  order  to  prevent  de- 
frauded  creditors  from  recovering,  Sage  and  his  asso- 
ciate- corrupted  the  Minnesota  Legislature  to  pass  an 
act  reorganizing  the  c»mpanv  into  two  divisions,  one  di- 
vision called  the  St.  Paul  and  Pacific,  and  the  other,  the 
First  Division  of  the  St.  Paul  and  Pacific  Railroad  Com- 
pany. This  legislative  act.  the  courts  held,  entirely  re- 
lieved the  two  new  corporations  from  the  debt-  of  the 
old  corporation,  although  it  in  nowise  atiected  their  land 
grant  and  franchise  right,-. 

1  laving  thu-  made  it  impossible  for  creditors  to  re- 
cover, Sage  and  companv,  on  the  plea  that  "further 
public  encouragement  wa-  nece--ary  to  complete  the  rail- 
road." lobbied  an  act  through  Congre-s  in  18^5,  by 
which  the  land  grant  wa-  increa-e<l  to  ten  sections  a  mile 
i'or  each  mile  of  the  railroad  and  its  branches.  They 
then  mortgaged  the  railroad  and  it:-  land  grants  to  a 
'icate  of  Dutch  capitalists  for  813.380,000.  of  which 


THE   HILL  FOKTLM:  359 

$8,000,000  was  immediately  diverted  by  various  fraud- 
ulent devices,  and  the  railroad  was  again  plunged  into 
bankrnpcy.K;  in  1875,  Judge  Dillon,  of  the  United 
States  Circuit  Court,  appointed  a  receiver  for  the  rail- 
road in  the  person  of  Jesse  1'.  Farley. 

lUt.f.  STEPS  IN    WIIF.RK  SAG!-;  I.KAVKS  OFF. 

Hill  and  his  associates  stepped  in  where  Sage  left  oll 
\Ve  have  seen  how  Farley  expended  only  about  $100,000 
in  constructing  and  repairing  the  railroad.  So  little  was 
done,  and  the  road  was  in  such  a  disgraceful  condition, 
that  on  March  9,  1878,  the  Legislature  of  Minnesota 
passed  an  act  declaring  that  unless  a  specified  number  of 
miles  should  be  built  by  certain  dates,  the  uncompleted 
portions  of  the  railroad,  together  with  the  land  grants, 
right.-,  franchise.--  and  exemptions  from  taxation,  should 
be  at  once  forfeited  to  the  State  of  Minnesota  "  without 
any  act  or  ceremony  whatsoever."  From  another  direc- 
tion, also,  trouble  was  threatening.  The  I  )utch  bond- 
holders were  angrily  clamoring  to  know  what  had  become 
of  their  millions,  and  had  appointed  John  S.  Kennedy 
a  Xew  York  banker,  as  their  representative  to  bring  suit. 

Hill  saw  the  opportunity  of  getting  for  almost  nothing 
a  railroad  of  five  hundred  miles,  and  a  land  grant  oi  more 
than  two  and  a  half  million  acres.  I  low  did  he  manage 
it?  According  to  Farley's  repeated  statements  in  subse- 
quent court  proceedings,  llill  anil  N'orman  \\  .  Kittson 
entered  into  a  conspiracy  with  him  (Farley)  to  betray 
the  L'nited  States  Courts,  and  at  the  same  time  Kenned  v 
conspired  \viih  him  to  betray  the  Hutch  bondholders. 


These  allegations   Hill  denied,  but   Farley  asserted  and 
reasserted  their,  in  many  court  proceedings." 

THE    METHODS    P.V    WHICH    CONTROL    WAS   OBTAINED. 

Farley  was  an  ignorant,  almost  illiterate,  man  who  had 
seen  some  railroad  experience  in  Iowa,  and  his  cupidity 
was  well  known.  That  he  was  selected  as  a  receiver,  or 
rather  recommended  to  the  court,  by  Kennedy  is  definitely 
asserted  in  the  court  decisions.13  Undoubtedly  he  was 
chosen  by  Kennedy  in  accordance  with  a  surreptitious 
agreement,  because  it  was  known  that  he  would  prove  a 
pliable  tool.  If  Farley's  own  sworn  statements  may  lie 
accepted,  he  was  to  mismanage  the  affairs  of  the  railroad 
so  that  the  price  of  the  bonds  would  be  reduced,  and  he 
was  to  inform  Hill  and  Kittson  of  every  move  that  he 
made.  At  the  propitious  time.  Hill  and  Kittson  were  to 
come  forward  and  get  control  of  the  railroad.  Xeither 
Hill  nor  Kittson  had  the  nccessarv  money  to  do  this,  but 
according  to  Farley  they  were  to  give  a  two-fifths  or 
lorty-per-ceiit.  interest  to  anvone  supplying  the  fund-. 
Farley  contended  that  this  agreement  further  provided 
that  a  three-fifths  or  si.\ty-per-cent.  interest  should  be 
reserved  for  him-elf  ami  for  Hi!!  and  Kittson — one- 
tifth  for  each  of  the  trio.1'1 

The  all  important  consideration  was  to  build  at  once 
the  extensions,  in  view  of  the  act  of  the  Minnesota  Legis- 
lature threatening  the  franchi>e  right-  and  land  grant 

••'  Farley    vs.    St.    Paul.     Minnrapoli-    and    Manitoba     Railroad 

1  oinpnny.     Federal     Reporur.    xiv:  114-118;     United    Stales    Re- 

ports,    Vol.     cxx  :  303-31^:     Farley    vs.     Mill.     Federal     Reporter. 

•:i^--j_!.    Farley  vs.   \~onnan   \V.   Kut-on  et   a!..   Minnesota 

ts,    \\vii  .  ioj- 107. 

1  ;:1    Rep'  'Her.    xx\i\  :  5  i'i 

1     r!    5     v1-'.    N'ornian    \\      Kiu.-nn    el    al..    Minnesota    keport-. 
\  \vii  :  i<>?. 


TilL    11  ILL    FORTUNE  361 

with  forfeiture.  But  who  would  supply  the  funds  for 
this  construction  ?  Kittson  brought  in  two  fellow-Cana- 
dian friends — -George  Stephen,  manager  of  the  Bank  of 
Montreal,  and  Alexander  Donald  Smith,  long  associated 
with  the  Hudson  Bay  Trading  Company.  Where 
Stephen  and  Smith  obtained  the  millions  of  dollars  which 
they  now  advanced,  has  never  been  clearly  shown,  li 
was  long  persistently  charged,  by  at  least  one  responsible 
member  of  the  Canadian  Parliament,  among  others, 
that  Stephen,  Smith  and  one  Angus  withdrew  $6,000,000 
from  the  Bank  of  Montreal  with  which  to  finance  the 
enterprise,  without  the  knowledge  of  their  co-directors. 
So  far  as  documentary  proof  of  this  allegation  is  con- 
cerned, none  has  been  found;  it  may  exist,  but  we  have 
been  unable  to  discover  it. 

II  ILL    AND    J1IS    C'LIOt'L    (,KT    T 1 1 K    RAILROAD. 

The  campaign  to  get  control  of  the  railroad  was  now 
Jairly  complete.  The  various  properties  embraced  in 
the  railroad  company's  title  were  mortgaged  in  several 
mortgages  amounting,  in  the  aggregate,  to  $28,000,000 
of  bond<.  Hill  and  hi-  a--ociates  bought  in  these  $28.- 
000,000  of  bonds  at  an  absurdly  lo\v  price,  in  some 
cases  of  large  issues,  at  only  three  per  cent,  of  their 
value.  The  range  of  prices  was  from  thirteen  and  a 
quarter,  to  seventy-five  per  cent.,  of  their  par  value.17 
I'm  Hill  and  his  partner-  were  not  required  to  pay  in 
immediate  cash.  The  bond-  were  chiefly  bought  on  the 
understanding  that  they  were  not  to  be  paid  for  until 
the  railroad  was  reorganised. 

Such  actual  monev  n-  was  expended  was  -pent  in  a 
hr.sv  effort  to  construct  thr  extensions,  and  thus  fore- 


302         HISTORY    01-    THE    GREAT    AMERICAN    EuKTL'NES 

.-•tall  the  forfeiture  law.  "  Under  these  circumstances," 
i he  court  record  states,  "  the  receiver,  at  the  instance  of 
.Mr.  George  Stephen  and  other  large  bondholders 
(James  J.  Hill,  Donald  A.  Smith  and  Xorman  W.  Kitt- 
son)  hurried  to  court,  and  got  an  order  on  April  18, 
1878,  to  get  authority  to  issue  debentures  to  complete 
the  extensions."  1S  Under  the  authority  of  the  court, 
Farley,  out  of  the  funds  advanced  by  the  Hill-Stephen 
combination,  built  one  hundred  and  twenty-five  miles  of 
railroad  at  an  aggregate  cost  of  $1,016,300.  This  ex- 
tension gave  an  unbroken  railway  connection  between 
St.  Paul  and  the  Canadian  system  of  railway  in  Mani- 
toba. 

(July  one  thing  more  was  necessary  to  get  the  whole 
railroad  line  out  of  the  jurisdiction  of  the  Court  into 
absolutely  private  possession.  This  was  a  decree  of 
foreclosure.  On  April  ti,  1879,  a  final  order  of  fore- 
closure was  decreed,  and  on  June  14,  1879,  the  road 
was  sold  to  the  St.  Paul.  Minneapolis  and  Manitoba 
Railroad  Company.  This  company  Hill  and  his  asso- 
ciates had  organized  a  month  before  the  sale,  for  the 
express  purpose  of  buying  the  railroad  under  foreclosure. 
The  entire  cost  of  the  main  lines  and  extensions  of  the 
St.  Paul  and  Pacific,  both  divi-ions,  was  $6,780,000. 
I'.ut  the  Hill  coterie  were  not  called  upon  to  pay  this 
-urn  in  money.  They  were  allowed  to  turn  in  receiver's 
debentures  and  bonds  a-  payment  for  the  purcha-e  price. 


Tllii    HILL    riJKTL'Xli  363 

thereby  confessing  his  criminal  complicity  in  being  a 
party  (as  he  swore)  to  a  clandestine  agreement  by  which 
such  a  sale  had  been  fraudulently  arranged  for  in  ad- 
vance. In  the  suit,  in  1880,  of  Wetmore  vs.  the  St.  Paul 
and  Pacific  Railroad  Company,  to  set  aside  the  sale, 
Judge  Miller  estimated  the  five  hundred  and  sixty-five 
miles  of  railroad  and  the  2,586,606  acres  of  land  to  be 
worth  $20,000,000  or  more.19  In  fact,  from  a  part  of 
the  land  grant  alone,  aside  from  the  railroad  property 
itself,  Hill  and  company  obtained  more  than  twice  the 
sum  that  they  had  paid  for  the  entire  property.  Im- 
mediately after  the  foreclosure  sale,  they  sold  the 
greater  part  of  the  land  grant  for  $13,068,887. 

A  few  years  previously  Mill  was  a  poor  man ;  perhaps 
he  had  a  few  thousand  dollars.  The  operation  described 
at  once  made  him  a  millionaire.  Me  and  his  associates 
not  only  held  the  railroad's  bonds,  but  they  apportioned 
the  stock  among  themselves.  Mill  and  Kittson  each  re- 
ceived 57,646  shares  of  stock,  and  the  other  members 
of  the  combination  their  share.  In  addition,  they  other- 
wise made  large  profits.-"  As  soon  as  the  railroad  was 
secure  in  their  possession,  thev  began  the  accustomed 
process  of  hugelv  watering  its  stock. 


THAf    III-:   \\  A 

Farlev  was  bittcrlv  disappointed  at  receiving  none  of 
the  spoils.  So  determined  was  he  to  get  what  he  claimed 
was  his  allotment,  that  he  did  not  mind  the  publicity  of 
his  betrayal  of  his  trust  as  receiver.  Me  brought  a  suit 
against  Kittson,  Mill,  etc..  in  the  Minnesota  Supreme 
('onrt.  alleirinir  thai  bv  airreunent  he  was  to  receive  one- 


364         HISTORY    Oi'    Till-;    GREAT    AMERICAN    FORIL'NKS 

fifth  of  the  capital  stock  of  the  railroad,  and  one-fifth 
of  all  other  securities  and  property  acquired  by  Kittson, 
Hill  and  the  others  of  the  combination,  as  a  result  of  his 
collusion.  It  was  a  very  audacious  ground  upon  which 
to  base  a  complaint.  Farley  could  produce  no  written 
agreement,  and  Judge  Gilfillan,  in  October,  1880,  decided 
that  he  had  not  proved  his  case.21 

At  the  same  time,  Farley  sued  the  St.  Paul,  Minne- 
apolis and  Manitoba  Railroad  Company  in  the  United 
States  Circuit  Court.  The  attorneys  for  the  defense,  it 
is  interesting  to  note,  based  their  main  plea  for  non- 
suiting the  case  on  the  ground  that  a  court  official  who 
had  betrayed  his  trust  had  no  standing  in  court.  In  this 
particular  plea  Judges  Treat  and  Xelson  concurred. 
Their  decision,  rendered  in  1882,  said  in  part: 

Courts  will  not  and  ought  not  be  made  the  agencies  whereby 
frauds  are  in  any  respect  recognized  or  aided.  They  will  not 
unravel  a  tangled  web  of  fraud  for  the  benefit  of  anyone  en- 
meshed therein  through  whose  agency  the  web  was  woven.  Es- 
pecially must  that  be  a  rule  where  a  trusted  officer  of  a  court, 
whose  position  is  both  advisory  and  fiduciary,  seeks  its  assistance 
to  compel  alleged  confederates  to  share  with  him  the  spoils  ac- 
quired through  his  concealments  and  deceit-,  which  he  admits 
were  deemed  by  his  confederates  and  himself  necessary  to  their 
success  through  his  betrayal  of  his  trust.--' 

Till-:     COURT     VIRTUALLY     CONI-IRMS     HIS     ( '  H  AK<  ,MS. 

Then  followed  parts  of  the  court's  decision  prac- 
tically confirming  Farley's  statements  that  he  had  entered 
into  a  conspiracy  of  colln-ion  with  Hill.  Kittson. 
Stephen,  Smith,  etc.,  on  the  one  hand,  and  Kenned}'  on 
the  oilier.  "The  plaintifY."  continued  the  decision. 


TI1K    HILL    FOIUTXK  365 

"  conceived  a  scheme  to  wreck  the  vast  railroad  interests 
which  it  was  his  duty  to  protect.  Through  a  betrayal 
of  his  trust  under  such  circumstances,  according  to  his 
version  of  the  facts,  these  vast  railroad  properties  have 
been  secured,  and  a  profit  realized  of  $15,000,000  or 
more.'*  -y 

The  court  went  on  to  say  that  for  his  betrayals,  Farley 
was  to  get  a  portion  of  the  spoils,  and  the  ground  oi' 
his  suit  was  that  his  associates  had  repudiated  the  fraud- 
ulent contract.  As  they  refused  to  divide  the  spoils, 
Farley  had  sought  the  aid  of  the  courts  to  compel 
them  —  a  very  strange  demand,  the  decision  said,  to 
bring  into  any  court.  As  for  Kennedy's  part  in  the 
transaction,  the  decision  set  forth.  "  It  is  charged,  how- 
ever, and  for  the  purposes  of  the  case  may  be  admitted, 
that  Mr.  Kennedy,  agent  of  the  Amsterdam  Committee, 
was  advised  by  the  plaintiff  [Farley]  during  the  progress 
of  the  scheme  that  he,  the  plaint  iff.  was  secretly  betray- 
ing his  trust."  24  The  decision  concluded  by  saying  that 
Farley's  cause  of  action  was  based  on  "  inherent  turpi- 
tude," and  that  the  court?  would  not  recognize  any  such 
action  as  valid.-5 

FAKLKY   INSISTS   UPON   GRTTIXC   HIS   SHARK   OF   T 11  F.   SPOILS. 

Farley  carried  the  case  to  the  Supreme  Court  of  the 
United  States.  That  court,  in  October.  1886.  held  that 
the  plea  put  forth  in  the  lower  court  was  unsatisfactory, 
in  that  it  had  not  established  any  question  of  fact.  The 
case  was  remanded  with  instructions  for  a  new  trial.2" 

The    suit,    therefore,    came    up    again    in    the    United 


366         HISTORY    OF    THE    GREAT    AMERICAN    FORTUNES 

States  Circuit  Court  at  St.   Paul,  this  time  in  September, 
1889.     This  court's  statement  of  the  case  reads: 

In  1876,  complainant,  Farley,  was,  by  appointment  of  this 
court,  receiver  of  the  property  of  the  St.  Paul  and  Pacific  Rail- 
way, and  also  general  manager  of  the  lines  of  the  First  Division 
of  the  St.  Paul  and  Pacific  Railway  Company.  .  .  .  Several 
series  of  mortgage  bonds  were  outstanding,  largely  owned  and 
held  in  Holland.  Complainant  alleges  that  he  and  the  defend- 
ants, Kittson  and  Hill,  entered  into  an  agreement  for  the  pur- 
chase of  these  bonds,  or  a  majority  thereof,  and  the  use  of  the 
same  in  the  purchase  of  the  road  in  foreclosure  of  the  mortgages. 
The  defendants  were  to  furnish  the  funds  necessary  therefor, 
and  the  complainant  to  furnish  facts,  information  and  assistance. 
Certain  it  is  that  the  bonds  were  purchased  by  the  defendants, 
Hill  and  Kittson,  with  two  associates,  foreclosures  consummated, 
and  the  railway  properties  acquired.-7 

The  question  was,  the  court  declared,  whether  such 
a  contract  had  been  made,  and  if  so,  whether  it  was 
against  public  policy. 

Farlev  testified  that  an  oral  contract  had.  been  made, 
and  he  was  corroborated  by  his  clerk,  Fisher.  1  lill 
denied  it,  and  as  for  Kittson,  he  had  died  before  his 
testimony  could  be  taken.  Various  letters  of  Farley's 
correspondence,  with  the  banking  firm  of  John  S. 
Kennedy  and  Company  were  produced  in  court  and  were 
incorporated  in  the  court  record.  One  of  these,  written 
on  May  23,  18/9.  by  Farley  to  John  S.  P>arncs,  a  mem- 
ber of  the  Kennedy  firm,  read  : 

Since  the  election  of  I'.igelow  and  C-alush,  as  Directors  in  the 
Xew  Company,  Men  of  no  .Money,  railroad  experience  or  Influ- 
ences. And  myself  left  "in  in  the  cold,  I  am  forced  to  the  con- 
clusion that  My  time  and  claims  mi  the  Si.  I'au!  and  Pacific  is 
Short,  I  did  expect  betlcr  tilings  of  Hill  and  Kiitson.  I  had  a 
talk  with  Jim  Mill  la-t  Knight,  lie  disclaims  any  intention  on 
his  part  to  ignore  my  claims,  but  he  is  Mich  a  I.yer  can't  be- 


TH1<:    1I1LL    FOKTUXT,  367 

beve  him.  It  is  a  matter  of  astonishment  to  every  person  in  St. 
Paul  to  see  the  way  Jim  Hill  handles  Mr.  Stephens,  lie  is 
notoriously  known  to  be  the  biggest  liar  in  the  state.  Mr.  Kilt- 
son  told  me  time  and  time  again  that  Jim  Hill  is  the  worst  man 
he  ever  saw.  L'pham,  P.  H.  Kelly,  Thompson  and  in  fact  every 
citizen  in  St.  Paul  if  they  would  Speak  their  Sentiments  would 
all  tell  the  same  story.  You  Must  Not  blame  Me  if  I  should  try 
to  get  even  with  Jim  Hill  before  1  leave  here.-8 

In  deciding  the  case,  Justice  Brewer  said  that  he  did 
not  believe  such  a  contract  had  been  made,  and  he  based 
his  belief  on  this  singular  and  highly  amusing  ground  of 
reasoning:  "  Is  it  probable,"  he  wrote  of  Farley,  "that 
a  man  so  situated,  with  his  years  of  experience  in  rail- 
road foreclosures,  and  owing  such  a  duty  to  the  bond- 
holders, would  enter  into  a  secret  arrangement  with 
third  parties  for  the  purchase  of  the  bonds — -an  ar- 
rangement which  made  it  to  his  interest  to  reduce  the 
market  price  of  bonds?  Is  it  probable  thai  such  a  man 
would  deliberately  cloud  the  record  of  his  life?''  etc., 
etc.-1'  Of  course  not. 

Again  Farley  carried  the  case  to  the  Supreme  Cottrt 
of  the  (United  States.  This  court,  in  October,  1893.  up- 
held the  decision  of  the  Circuit  Court,  declaring  that. 
Farley  had  not  proved  his  claim.1"0  After  thirteen  years 

-s  Federal  Reporter,  xxxix:  521.  One  of  Hill's  eulogists  in 
a  "biography,"  very  effusive  on  the  whole,  publi-hed  in  the 
Xew  York  "Tribune."  issue  of  April  7.  )<;o7.  \\\u<  wrote  of  Hill: 

"Mr.  Hill  has  a  reputation  in  the  Northwest  as  a  very  hard 
man  in  business.  .  .  .  He  has  never  had  patience  with  any 
one  who  could  not  practice  unllaguing  industry  _aud  self-de- 
nial. Out  of  this  same  trail  ha-  grown  the  conviction  among 
railroad  men  that  'Jim'  Hill  i<  the  hardest  man  in  the  business 
to  work  for.  For  him-elf  there  has  never  been  a  quitting  time. 
I-.ven  now  he  is  busy  nights  and  Sundays  when  there  is  work 
to  do.  Tt  has  always  been  a  short  r-hrift  for  those  in  his  em - 

there  were  -uch  things  as  office 


ploy   who  could   not    forget    ir 


-"-'Federal   Reporter,    xxxi 


368         HISTORY    OF    Till-:    GREAT    AMERICAN    FORTl'XES 

of   legal   contest,   Farley   was   unable  to  collect   a   single 
dollar. 


LULL  AND  HIS  PARTNERS  BECOME  GREAT  DIGNITARIES. 

Of  the  men  whom  Farley  alleged  conspired  with 
him,  or  who  were  alleged  to  have  profited  by  his  betrayal 
of  his  duty.  Hill  became  the  great  multimillionaire  auto- 
crat of  the  Northwest,  and  Stephen  and  Smith  obtained 
peerages  from  the  British  Crown  —  Stephen  as  Lord 
Mount  Stephen,  Knight  of  the  Grand  Cross  of  the  Royal 
Victorian  Order,  etc.,  and  Smith  as  Lord  Strathcona, 
Knight  of  the  Order  of  St.  Michael  and  St.  George,  etc.:u 
Kennedy  rose  to  be  a  multimillionaire  ;  when  he  died  on 
October  31,  10,09,  he  left  a  fortune  estimated  at  from 
$30,000,000  to  S6o.ooo.ooo  which  included  $7,000.000 
worth  of  stock  in  the  Great  Northern  Railway,  mostly 
obtained  at  the  very  time  he  betrayed  his  clients,  the 
Dutch  capitalists.  lie  also  held  S  10,000,000  of  North- 
ern Pacific  Railway  stock,  secured  at  about  the  time 
when  the  Northern  .Pacific  Railroad  Company,  as  we 
shall  see.  was  bribing  land  grants  through  Congress  and 
stealing  vast  mineral  deposits  from  the  public  domain. 
In  the  latter  years  of  his  life,  Kennedy  gave  a  few  mil- 
lions for  "  philanthropic  purposes,''  and  was  exalted  as 
"a  great  philar.thropi.-4."  His  will  revealed  that  he  be- 
queathed tens  of  millions  to  philanthropic  and  educa- 
tional in.->tituiions. 

Th:.-  bv  wav  of  passing  explanation.  To  continue  the 
story  of  the  Hill  fortune,  however:  Hill  and  his  asso- 
ciates secure;!  more  franchises  and  special  laws,  built 
extensions,  and  formed  the  Great  Northern  Railroad  otit 
of  the  railroads  that  they  had  obtained  and  the  exten- 

•;:  Stv    "  I'.urkt/-    Ikurriiit.-." 


sions  which  they  constructed.  The  Legislatures  of  llie 
Xortlnvest  were  deluged  with  bribe  money,  although  it 
was  never  specifically  proved  that  Hill  was  the  dis- 
tributor. The  whole  newspaper  press  was  subsidi^tj-1. 
and  towns,  cities  and  counties  were  prevailed  upon  to 
grant  endowments  and  exemptions  of  all  kinds.  So  riie 
was  this  corruption,  that,  in  1883,  some  protesting  mem- 
bers of  the  Minnesota  Senate  introduced  this  resolution 
which  was  adopted  : 

WHEREAS,  The  acquisition  and  holding  of  large  interests  in 
land-grant  railroads,  public  contracts  and  other  schemes  receiv- 
ing aid  from  the  General  Government,  by  high  l\('-jral  officials, 
places  such  officials  in  positions  where  they  cannot  be  true  to  the 
public  interests,  without  a  sacrifice  of  self  interest  :  and 

WHKKEAS,  Money  thus  acquired  by  public  men  is  ordinarily 
used  to  corrupt  the  springs  of  political  intluencc,  and  prevent  the 
expression  of  the  real  sentiments  of  the  people,  and, 

WHKKEAS,  It  is  alleged  that  in  the  preceding  Senatorial  election, 
certain  members  of  this  Legislature  have  been  improperly  and 
corruptly  intluencvd  by  promises  of  money,  public  office  or  other 
valuable  considerations,  for  a  certain  candidate  for  United  States 
Senator,  therefore, 

The  resolution  called  for  a  Special  Investigating  Com- 
mittee of  Seven.'-  Ihe  report  of  this  committee,  while 
of  a  whitewashing  and  partisan  nature,  indicated  an  ap- 
palling state  of  corruption. 

The  significance  of  this  self-admitted  corruption  of 
the  successive  Minnesota  legislatures,  will  be  better 
understood  by  a  consideration  of  one  among  a  lar^v 
number  of  characteristic  episodes. 

On  March  i,  1877.  when  the  popular  indignation 
against  the  robberies  and  usurpations  committed  by  Rus- 
sell Sage  and  his  band  was  at  its  height,  the  Minnesota 
Legislature  had  enacted  that  the  St.  Paul  and  Pacific 


37O          HISTORY    OF    Till-:    HRKAT     AMKKICAX     FORTl'XKS 

Railroad  Company  should  have  no  right  "  directly  or  in- 
directly "  to  any  land  upon  which  settlers  had  settled  in 
good  faith.  Inasmuch  as  a  certain  part  of  the  railroad 
wa<-  not  completed  until  November,  1878,  the  terms  of 
ihe  act  of  Congress  of  June  22,  1874,  were  violated. 
This  act  had  extended  the  time  of  completion  to  March 
3,  1876;  otherwise  the  land  grant  was  to  be  forfeited. :!;; 
l.iut  the  Supreme  Court  of  the  United  States  conven- 
iently decided  that  a  mere  breach  of  the  conditions  of 
the  act  of  Congress  did  not  of  itself  work  a  forfeiture 
of  the  grant;  either  Congress  or  the  Minnesota  Legisla- 
ture had  to  take  some  specific  action  declaring  the  for- 
feiture.1''4 The  es-ential  object,  therefore,  on  the  part  of 
Hill  and  his  associates  was  to  prevent  Congress  and  the 
Minnesota  Legislature  from  passing  such  a  forfeiture 
act  ;  and  thev  were  successful. 


After  Mill  had  secured  control  of  the  St.  Paul  and 
Pacific  Railroad,  under  the  name  of  the  St.  Paul,  Min- 
neapolis and  Manitoba  Railroad,  and  had  changed  the 
title  to  that  of  the  ( ireat  Northern  Railroad,  he  claimed 
in  1884,  sixtv-five  thousand  acres  of  land  in  Dakota. 
Ik-fore  1884  no  claim  had  ever  been  set  up  bv  the  com- 
pany to  that  land.  The  claim  was  based  upon  the  old 
land-grant  act  of  1857,  passed  when  Dakota  was  a  part  of 
Minnesota.  For  vears  the  country  along  the  Red  River 
in  Dakota  had  remained  a  wilderness  until  farmers  settled 
there,  and  converted  it  into  <.me  of  the  richest  agricul- 
tural regions  in  the  West.  The  General  Land  Office 


THE    HILL    FORTUNE  3/1 

took  it  for  granted  that  this  land  did  not  belong  to  the 
railroad  company,  and  had  given  full  titles  to  the  settlers. 

In  November  and  December,  1891,  intense  excitement 
prevailed  among  the  farmers  in  the  Red  River  Valley. 
An  order  had  been  issued  by  the  Great  Northern  Rail- 
road Company  compelling  farmers,  by  December  [5,  to 
vacate  lands  belonging  to  the  company.  This  order  was 
based  upon  a  decision  of  the  Supreme  Court  of  the 
United  States  declaring  that  the  company's  land  grant 
extended  to  the  Territory  of  Dakota  —  now  the  States 
of  North  Dakota  and  South  Dakota."5  This  decision 
gave  the  company  some  of  the  most  fertile  and  valuable 
areas  in  Dakota.  Unquestionably,  under  the  acts  of  Con- 
gress, these  lands,  even  if  the  original  grant  had  extended 
west  of  the  Red  River,  had  long  since  been  forfeited. 
The  Supreme  Court  of  the  United  Statc>.  however,  by 
its  successive  decisions,  negatived  the  explicit  acts  of 
Congress.  The  Great  Northern  Railroad  thereupon 
began  the  eviction  of  farmers  in  the  odd  numbered  sec- 
tions within  the  twenty-mile  indemnity  limit  of  its  land 
grant.  This  order  of  the  company  was  like  a  thunder- 
clap to  the  settlers.  Many  had  resided  on  the  land  for 
twentv  years. 

The  settlers  appealed  to  Congress.  That  body  passed 
an  act  to  allow  the  railroad  company  to  select  an  equal 
area  of  lands  in  lieu  of  those  settled  upon.  This  act, 
although  apparently  passed  for  the  benefit  of  the  settlers, 
was  precisely  what  the  Great  Northern  Railroad  Com- 
pany was  waiting  for.  The  land-  relinquidied  by  the 
company  were  non-mineral;  the  act  of  Congress  there- 
fore, provided  that  the  lands  in  exchange  that  it  should 
select  elsewhere  should  be  non-mineral.  Hut  when  the 
exchange  was  made  it  was  discovered  that  the  company 

•"••"  L'nitcd    States    Reports,    Vol.    cxxxvii  :  528. 


372          HISTORY    OF    Til!':    OKKAT    AMERICAN'     l-'ORTl'NES 

had  selected  the  must  valuable  timber  lands  in  Idaho, 
Montana  and  Washington  —  lands  worth  far  more  than 
the  Dakota  lands  —  and  that  on  some  of  these  lands 
rich  mineral  deposits  underlay  the  timber.  The  Commis- 
sioner of  the  General  Land  Office  at  that  time  was,  as 
\vc  have  noted  in  a  previous  chapter,  T.  II.  Carter.  His 
record  was  so  very  satisfactory  to  Hill,  the  ruler  of  the 
politics  of  the  Northwest,  that,  a  few  years  ago,  the  Mon- 
tana Legislature  was  allowed  to  send  Carter  to  the 
United  States  Senate,  of  which  he  is  now  a  distinguished 
member. 


HILL  S   IRON    ORE    DEPOSITS. 

Hill  personally  owns  immense  iron-ore  deposits  in 
Minnesota.  These  deposits  are  currently  estimated  to 
be  worth  at  least  a  billion  dollars.  In  1906  he  leased 
what  was  really  a  small  part  of  these  deposits  to  the 
Steel  Trnsi  for  a  period  of  twenty-five  years  on  a  royalty 
basis,  the  payments  amounting,  in  the  aggregate,  to  tens 
of  millions  of  dollars.  1  low  he  obtained  these  deposits 
is  not  told  clearly  in  official  documents.  We  have  seen 
in  previous  chapters,  that  the  original  land  grants  made 
by  Congress,  corrupt  as  were  the  circumstances  of  the 
passage  of  the  various  acts,  were  never  intended  to  cover 
coal,  iron  or  other  mineral  deposits.  But  by  fraudulent 
constructions  of  the  laws,  made  by  Land  Commissioners 
and  the  Courts,  coal  and  iron  lands  were  determined 
nut  to  be  included  within  the  meaning  of  the  word  min- 
eral. 

According  to  Senator  I'ettigrew's  version,  Ilill  secured 
large  iron  deposits  in  Minnesota  by  private  purchase, 
i-'nr  this  he  had  ample  capital,  reaching  hundreds  ol 
millions  of  dullar-;.  This  moncv  was  derived  from  ihe 


TJIL-:   HILL  [• 

St.  Paul  and  Pacific  Railroad  transactions,  successive 
illegal  stock  waterings,  and  the  extortionate  profits  from 
his  railroad  system  —  profits  terrifically  oppressive  to  the 
people  of  the  Northwest.  Senator  Pettigrew  writes  of 
the  purchase  by  Hill  of  these  iron  deposits:  "  The  iron 
underlay  forests  of  pine,  and  the  lumber  company  had 
built  a  lumber  road  to  get  out  the  pine,  and  having  cut 
the  pine  off,  sold  the  road  and  the  land  to  Mr.  Hill  at 
what  they  considered  a  very  exorbitant  price,  but  it 
turned  out  that  underlying  the  land  were  vast  deposits 
of  iron  ore.  I  think  Mr.  Hill  estimates  the  mines  at  five 
hundred  million  tons."  ;iG  If  this  account  is  correct,  it 
may  saiely  be  assumed  that  Hill  knew  the  character  of 
the  land  before  he  bought  it;  judged  by  business  stand- 
ards it  was  a  very  astute  transaction. 

This  assumption  is  borne  out  by  the  facts  revealed 
in  a  suit  brought  at  St.  Paul,  in  January  29.  [901.  by 
H.  \Y.  Pearson,  a  geologist  of  Duluth,  against  Hill  and 
the  (Ireat  Northern  Railroad  Companv.  The  sum  in- 
vi  lived  in  the  proceeding  was  stated  to  be  not  less  than 
Si  |, 000,000  which  was  alleged  to  be  the  value  of 

:;ii  Related  in  a  personal  letter  to  the  author.  In  Chapter  ii, 
Vol.  ii,  of  this  work  ("'['he  Seizure  of  the  I'ublic  Domain'"). 
\ve  have  seen  ho\v  large  areas  of  land,  granted  to  canal  cor- 
porations as  nominally  swamp  lands,  were  so  fraudulently  sur- 
veyed as  to  include  some  of  the  very  richest  copper  deposits 
in  the  Xoriiuvest.  The  same  was  true  of  iron  ore  deposits  in 
some  of  tlie  grants  to  railroad  corporations.  It  cannot  he  said 
that  the  beneficiaries  of  the^e  frauds  were  unaware  ot  ihe  fari 
that  copper  and  iron  ore  <iepo>i(>  were  on  ihe  land-  tin:-  fraud- 
ulently acquired  hy  them.  A  number  of  reports  by  Government 
geoli  gi-al  experts  h::d  de.-erihcd  the  extent  and  location  ot  these 
mineral  deposits.  One  voluminous  repot-'.,  in  particular,  was 
that  i>y  [.  \Y.  ["osier  and  J.  1).  Whitney.  United  State.-  Govern- 
ment geologists.  1;  wa>  i--ued  in  1851,  and  gave  full  de-crip- 
lions  of  tlie  character  of  the  mineral  land-.  It  especially  de- 
scribed the  iron  ore  deposits  of  the  Lake  Superior  region  a^ 
being  of  an  almost  unprecedented  state  of  purity. —  L".  S.  Sen- 
ate Documents.  Special  Session,  Thirty-second  Congress,  1851, 
Vol.  iii,  Dor.  Xo.  4. 


3/4         HISTORY    01'    THE    GKKAT    AMERICAN     FORTUNES 

property  held  by  Hill  and  his  railroad,  and  taken  by  them 
after  its  discovery  by  Pearson.  In  his  complaint  Pear- 
son averred  that  these  mineral  deposits  were  located 
by  him  under  a  contract  with  Hill  by  which  he,  Pearson, 
was  to  have  a  share  in  the  profits.  Pearson  further 
.'.dlegvd  that  he  had  been  employed  by  Hill,  in  1896,  to 
locate  coal  and  iron  deposits  in  the  States  of  Washington 
and  Montana;  that  he  found  the  deposits;  that  under 
his  direction  the  Hill  interests  secured  thousands  of 
acres  of  valuable  land,  and  that  when  he  presented  his 
claim  for  a  share,  he  was  cast  aside.  Of  the  final  dis- 
position of  this  suit  no  record  appears  in  the  available 
court  documents. 

If.  however,  the  methods  used  by  the  Great  Northern 
Railroad  in  appropriating  mineral  lands  have  been  the 
same  as  those  employed  by  the  Northern  Pacific  Rail- 
road, then  their  nature  is  clear.  This  latter  railroad  was 
not  originally  owned  by  Hill,  but  he  and  those  allied 
with  him,  now  hold  its  ownership.  '  The  net  outcome," 
says  .Mood}-,  "of  the  Northern  Pacific  corner,  and  of  the 
Northern  Securities  incident  "'  has  been  that  the  Hill 
interests  remain  in  undisputed  control  of  the  three  vast 
railroad  system-  which  now  go  under  the  name  of  the 
Hill  properties,  viz:  The  Northern  Pacific,  the  Great 
Northern,  and  the  Chicago,  Burlington  and  Ouincy. 
constituting  in  the  aggregate,  over  18.000  miles  of  rail- 
r>  -ad  line-.""' 

T1LI-:  NORTHERN    PACIFIC  RAILROAD. 


Tin-:  iiiu.  FOUTI.XI-:  375 

the  right  of  way  through  the  public  domain,  the  right  to 
take  from  the  public  lands  material  for  construction,  and 
an  immense  area  of  public  lands  in  Montana.  Idaho  and 
other  sections  of  the  Northwest.  The.-j  enormous 
privileges  and  grams  were  given  to  it  at  the  identical 
time  \vheii  the  Union  Pacific  Railroad  and  other  land- 
grant  and  subsidi/ed  railroad  companies  \\ire  bribing 
Congress.  As  \ve  have  seen,  the  I  nion  Pacific  Railroad 
disbursed  nearlv  8430.000  in  securing  the  passage  ol  the 
act  of  July  2.  1804,  increasing  the  Government  money 
subsidy  granted  to  it  and  doubling  its  land  grant.111' 
Doubtless  the  passage  of  the  Northern  Pacific  Railroad 
act  was  effected  by  the  same  means.  In  all.  the  North- 
ern Pacific  Railroad  obtained  about  57.000.000  acres  of 
public  domain. 

By  the  definite  terms  of  this  act  however,  all  mineral 
lands  were  expressly  excluded  from  this  grant,  although 
(lie  term  mineral  (to  repeat  an  explanation  already 
given)  wa>  later  fraudulently  construed,  in  the  ease  of 
all  land  grants,  not  to  include  iron  or  coal.  The 
Northern  Pacific  Railroad  was,  therefore,  endowed  with 
a  land  grant  forty  miles  wide  running  across  the  conti- 
nent, west  of  the  Missouri  River.  This  land  grant  in- 
••luded  vast  stretches  of  the  very  richest  timber  lands. 

The  ensuing  history  of  the  Northern  Pacific  Railroad 
was  the  -ame  as  that  of  all  other  railroads.  It  \vas 
plundered  by  successive  gronp<  of  capitalists  One  of 
the  capitalist-  powerfully  controlling  the  Northern  Pa- 
cific Railroad  for  some  years  was  Henry  \  illard.  a  man 
of  remarkable  character  and  enterprise.  Different  fac- 
tion- of  capitalists  fiercely  fought  him.  and  sought  to 


3/0         II  [STORY    OF     II11-.    GKKAT    A  MI-IK  1C  AN     FORTUNKS 

ou-t  him  from  the  control  of  the  Northern  Pacific  Rail- 
road and  other  railroads  in  the  Northwest.  In  hi-- 
"  Memoirs,"  Yillard  tells  of  a  formidable  combination 
arrayed  against  him  in  1889,  composed  of  Hill  and  large 
financial  corporations.  Four  years  later  Yillard  was  ac- 
cused by  his  opponents  of  having  profited  enormously 
from  buying,  in  his  individual  capacity,  "  semi-worth- 
less "  railroads  in  Manitoba  and  elsewhere,  and  then 
''  unloading  "  them,  at  exorbitant  prices,  upon  the  North- 
ern Pacific  Railroad,  which,  corporatively,  he  controlled. 
So  far  as  the  court  records  indicate  the  facts,  these 
allegations  seem  to  have  been  part  of  a  plan  to  discredit 
Yillard,  and  cause  his  overthrow  ;  when  the  charges  were 
passed  upon  by  the  courts,  Yillard  was  personally  vindi- 
cated, liut  that  the  railroad's  treasury  had  been  looted 
by  previous  group.-  of  capitalists  is  absolutely  clear;  con- 
testing factions  were  continually  charging  the  other  with 
the  responsibility  for  promotions,  extensions  and  enter- 
prises largely  devised  for  the  special  purpose  of  appro- 
priating large  amounts  in  loot.40  So  contradictory  and 
involved  were  these  charges  and  recriminations  that  it 
is  not  ea.-y  to  determine'  the  relative,  much  less  the  ab- 
solute,  truth.  Certain  of  Yillard's  capitalist  opponents 
were  especially  notorious  for  their  evil  records:  so  much 
so  that  charges  coming  from  them  were  received  with 
distrust  and  cynical  skepticism,  in  general,  and  with  dis- 
mi-.-al,  (.'ii  the  merits,  from  the  courts  in  particular. 

'"Such   charges  were  characteristic,  a>  we  have  so   frequently 
-tated,    of    capitalist    method-    of    warfare    upon    one    another. 
IHAVCT    were    violently    as-ailed    so    as    to    di-crulit 
:  "<:    di-lodtK-    them.     TIi!.1   spectacle    *.va-    frequently    presented   of 
ihe    ''leading"    and    nio-t    "respectable''    financier-     ferociously 
nc    another    as    liars    and    thieve-.     These    virtuou- 
ihur  :-.    it    i-    needless    to    say,   arose    from    no   moral    indigna 
ulterior   purpo-e    \va?   to   crush   the   other,   if   possible, 
and    •-:••<-    property  and   power. 


THE    HILL    FORTUNE  377 

ontesl 

wa>  iicrcely  carried  on. 


I -'or  years  the  contest  to  dislodge  Yillard  from  control 


GREAT    THEFTS    OF    AiiXERAL    LANDS 

During  the  time  that  various  capitalists  controlled  the 
Northern  Pacific  Railroad  the  thefts  of  mineral  lands 
were  so  extensive  that  both  Congress  and  the  State  of 
Montana  were  constrained  to  investigate.  The  people 
of  [Montana  were  greatly  agitated  over  the  railroad's 
claim  to  lands  containing  the  very  richest  gold,  silver, 
lead  and  copper  mines,  particularly  the  great  copper 
deposits  for  which  Montana  was  famous.  In  fact,  the 
people  of  the  entire  West  were  deeply  aroused,  for  if 
the  courts  should  finally  sustain  the  action  of  the  North- 
ern Pacific  Railroad,  then  all  of  the  other  Pacific  rail- 
roads could  likewise  claim  all  of  the  mines  and  mineral 
deposits  within  their  land  grants,  consisting  of  odd  num- 
bered sections.  Already,  in  i8<;o,  the  Supreme  Court 
of  the  Inited  States  had  provisionally  handed  down  a 
decision  sustaining  the  Northern  Pacific  Railroad's  claim 
that  oiil\  suet!  mineral  lands  as  \eere  icno\cn  to  be  mineral 
at  the  date  of  the  land  (/rant  were  to  he  excepted  from 
the  land  grant. 

The  trans-Mississippi  Congress,  meeting  at  Denver, 
in  May  and  October.  1891.  adopted  resolutions 
declaring: 

WHEREAS,  Thi>  dictum  of  tlu-   Supreme  Court,  if  it  -i,    /  ,', 
come    law,    would    invest    the    Pacific    railway   companies    hi  !di 
grants  of  land   from  the  (iovenmient    with  a  vast   number  or   the 
besl    mines  discovered  within   the   limits   ot    -aid   crrar.ts  b}-   pro- 
jectors and  miners,  who  have   located   therein  in  ,uood   faith  and 
de\eloped   and   sold   therein   in   the  h  ir.esl    1'clief  that    said  ,u.rant- 
wcre  limited  to  agricultural  laud-  only,  as  declared  in  the  act-  of 
Congress  making  them:  and 


370       HISTORY  or  Tin-:  GRKAT  AMERICAN   FOKTL~NI:S 

WHEREAS.  The  citizens  of  the  L'nited  States  have  invested  mil- 
lions of  dollars  in  the  development  of  mines  on  said  lands  which 
have  been  discovered  subsequent  to  the  date  of  said  grants:  ami 

WHEREAS,  The  consequences  of  this  newly  made  construction 
of  said  grants  must  be  the  confiscation  of  private  property  and 
the  spoilation  of  individuals  in  behalf  of  -aid  railway  companies 
on  a  scale  so  vast  that  history  affords  few  parallels  thereto,  and 
to  the  bringing  of  actions  to  recover  the  value  of  ores  heretofore 
mined  from  said  land.-,  which,  if  successful,  must  reduce  a  large 
number  of  our  citizens  to  want  and  beggary;  and 

WHEREAS.  If  said  construction  of  it  becomes  the  law  of  the 
land,  it  will  take  vast  regions  of  mineral  land  out  of  the  market, 
either  for  future  explorations  or  purchase,  to  the  manifest  injury 
of  the  people.  Wherefore,  be  it 

Rcsolrcd.  That  the  Congrer-s  protests  against  any  construc- 
tion of  the  -tatute-  of  the  United  States  which  will  result  in  such 
a  system  of  wholesale  confiscation,  and  the  consequent  enrich- 
ment of  great  combinations  already  enjoying  the  bounty  of  the 
government,  and  calls  upon  the  representatives  of  the  people  in 
Congress  assembled  to  take  such  prompt  and  immediate  action 
as  may  be  within  their  immediate  constitutional  prerogative  to 
de-troy  this  threatened  danger 

At  the  same  time  Martin  Maginnis,  Mineral  Land 
(Commissioner  of  Montana,  reported  to  ( lovernor  Toole 
that  the 

va-t    land    grant    of    the    Northern     Pacific    Railway    Company 
.-iretche>   from  the  eastern  to  the  we-tern  boundary  of  the   State 
iii    Montana  in   <me  broad  belt    which,  including  indemnity  Iand>. 
i-    nearly    one    hundred    and    twenty    miles    wide    and    over    -even 
hundred   mile-   long.     The   Congre-s    which   created   this  corpora 
rave  to  it  one-half  of  the  lands  within  these  limits,  carefully 
<  \cluding    all    mineral    land-,    and    emphasizing    their    reservation 
from    the    grant    by    giving   to    the    company    indemnity    for    such 
lands  as  might  turn  out  to  be  mineral.     Little  prospecting  had  then 
been  clone;  very  liilie  was  known  of  the  character  of  these  land--. 
'    discoveries  of  mineral  lard  had  yet  to  be  made,  the  mines 
them    to    be    developed    and    these    to    be    finally    -egregated 
"•otn   the   land   grant    of   the   company,   and    the   company   recom 
•    with  other  land:-  not   mineral   in  their  character 


THE    HILL    FORTUNE 

Xothing  would  scan  to  be  plainer  than  the  fact  that  the  reser- 
vation \vcnt  with  and  was  part  of  the  grant;  and  that  future  ex- 
ploration, survey  and  classification  would  be  necessary  to  define 
the  non-mineral  lands  which  would  become  the  property  of  the 
company  and  the  mineral  lands  which  were  reserved  to  be  for- 
ever open  to  the  prospector  and  the  miner,  under  the  mining 
laws  of  the  United  States. 

If  the  road  could  have  been  definitely  located  and  built  as  rap- 
idly across  the  continent  as  the  charter  was  pushed  through  the 
Congress,  it  would  have  been  left  to  the  future  to  prove  the 
character  of  the  lands,  and  if  the  company  at  that  time  by  virtue 
of  a  finished  road  claimed  all  the  lands,  surveyed  and  unsurveyed, 
unexplored  and  not  prospected,  that  company  would  simply  have 
taken  them  all  ;  for  the  mineral  discoveries  have  all  been  made 
since  then.  It  was  not  until  later  that  the  audacious  claim  was 
set  up  that  lands  not  then  known  to  be  mineral,  or  not  known 
to  be  mineral  at  a  certain  date,  were  therefore  not  mineral,  and 
by  consequence  passed  to  the  corporation.41 

Mineral  Land  Commissioner  Maginnis  then  dealt  ex- 
tensively with  the  long  delay  of  the  projectors  of  the 
Northern  Pacific  Railroad  in  building  the  railroad  —  a 
delay,  he  wrote. 

by  which  it  failed  in  one  of  the  primal  purposes  of  it.-  crea- 
tion, and  in  fairly  earning  that  part  of  its  endowment  which  was 
intruded  to  secure  its  completion  at  least  fifteen  years  before  it 
came  to  us.  who.  while  wearily  waiting  its  advent,  had  occupied, 
-ubducd  and  partially  developed  the  country  without  its  assist- 
ance. It  was  never  dreamed  that  the  railroad  company  would  set 
up  at  any  time  in  its  existence  a  claim  to  the  mineral  lands,  which 
\\ere  excluded  from  the  grant,  in  the  granting  act  it  set  t.  by  >pe 
citic  reservations  intended  to  run  with  and  be  a-  perpetual  a-  the 
grant  itself. 

Congress  had  created  no  tribunal  to  demit  which  were  mineral 
or  which  non-mineral  bearing  land-.  It  let")  that  to  the  executive 
department,  which  has  the  control  of  the  sale  and  survey  and 
classification  of  -ill  the  public  land-  \  large  portion  of  the  land 


.VX0         HISTORY    01-    THE    GREAT    AMERICAN    FORTUNES 

mside  lines  of  the  grant  has  never  heen  surveyed  or  in  any  way 
examined,  prospected  or  classified  by  the  government.  The  labor 
and  toil  of  the  voluntary  prospector  and  the  miner  has  alone 
made  known  which  are  mineral  districts  and  which  are  not. 

Suddenly  the  astounding  claim  was  set  up  that  all  the  portions 
of  the  country  which  had  not  heen  voluntarily  examined  by  the 
individual  prospector,  acting  under  no  agency  of  the  Government 
hut  at  his  own  expense,  and  therefore  proven  to  be  mineral  at 
a  certain  date,  were  to  be  considered  non-mineral  and  to  become 
the  property  of  the  Northern  Pacific  Railway  Company  in  spite 
of  the  fact  that  the  charter  itself  said  that  such  lands  never 
should  be,  and  that  the  company  should  take  other  lands  in  lieu 
thereof  in  order  to  make  up  the  quota  that  it  claimed. 

It  would  seem  that  neither  in  law  nor  equity  could  there  be  any 
warrant  for  such  a  claim,  that  the  company  cmild  not  obtain  by 
indirection  those  lands  that  were  directly  reserved  from  the 
grant  and  held  open  to  the  prospector  and  the  miner  under  the 
well-defined  policies  of  the  United  States  as  laid  down  in  its  laws 
governing  the  disposition  of  mineral  lands.  But  under  certain 
constructions  of  certain  cases  in  some  of  the  courts,  the  company 
did  set  up  its  claims  not  only  to  the  mineral  lands  but  to  the  min 
erals  which  had  been  mined.  It  contested  the  applications  for 
patents  to  mines  upon  odd  sections  and  sued  for  the  recovery  of 
(ires  taken  from  the  same. 

The  people  of  the  State  became  universally  alarmed  at  a  course 
which   threatened    such  calamity  to   its   interests   and    recognizing 
the    fact   that    poor   pro>pt-ci"rp   and   miners,   or    rich    ones   either 
for  that  matter,  could  not  successfully  contest  with  such  a  power 
fill  corporation,   the   State   determined   to  make   the   cau>e  of    it- 
people  its  own  cause,  and  with  that  object  in   view,  the   Legisla 
ture  passed  th"   following  law  :  4- 

Ilcre  followed  the  provisions  of  that  law.  the  object 
of  which  was  to  safeguard  the  interests  of  the  individual 
miners.  Notwithstanding  the  passage  of  this  act.  the 
lower  courts,  manv  of  the  judges  of  which  had  been 
railroad  attorneys,  or  who  had  been  elevated  to  the  bench 
bv  railroad  influence,  gave  decision  after  decision  in 


THii   HIM.   KokTrxK  381 

favor  of  the  Northern  Pacific  Railroad.  The  chief  op- 
ponents of  this  railroad  were  large  copper  corporations. 
such  as  the  corporation  controlling  the  great  Anaconda 
copper  mine,  then  valued  at  $25,000.000.  These 
corporations  had  themselves  obtained  their  mines  largely 
by  fraud.  But  individual  miners  and  prospector.-,,  in 
nowise  connected  with  any  fraudulent  operation,  were 
deeply  stirred,  and  in  turn  the  mass  of  resident  people. 
The  House  Committee  on  Public  Lands  of  Congress 
took  up  the  matter.  Yillard,  as  president  of  the  finance 
committee  of  the  Northern  Pacific  Railroad  was  busily 
in  evidence  with  his  attorneys.  "  Mr.  Henry  Yillard," 
stated  the  report  of  Mineral  Commissioner  Maginnis, 

next  engaged  the  attention  of  the  committee.  He  also  claimed 
that  the  company  was  now  completely  vested  with  the  title  of  the 
disputed  mineral  lands.  lie  considered  that  question  as  no 
longer  open.  The  Supreme  Court  could  only  affirm  the  numer- 
ous decisions  already  rendered  in  favor  of  the  railway  company. 
The  property  rights  of  the  corporation  were  heyond  the  reach 
of  legislation;  but  he  was  anxious  to  have  tin';-  controversy  set 
tied.  It  was  injuring  the  road  and  the  mining  industry  and  he 
was  ready  to  offer  a  compromise  on  the  part  of  his  company. 
He  was  authorised  to  submit  a  proposition  to  the  committee- 
That  the  company  would  agree  to  this  bill,  to  the  survey  and 
classification,  and  would  deed  back  to  the  United  State-  all  lands 
so  excepted  as  mineral:  Provided,  That  the  company  should  be 
recompensed  therefor  with  other  land>,  either  by  the  extent >n 
of  present  indemnity  limits  or  by  selection  fron  the  even  a>  well 
as  the  odd  sections  within  the  grant.4-" 

The  House  Committee  on  Public  Lands  reported  that 
the  Xorthern  Pacific  Railroad  had  included  in  its  land 
grant  the  richest  and  most  extensively  developed  mine- 
in  Montana  and  Idaho.  "  Within  this  grant  are  also  in- 
cluded millions  of  acres  of  land  not  vet  entirelv  or  at  all 


382         HISTORY    OF    Till;    GREAT    AMERICAN    FORTUNES 

explored  for  minerals  but  which  .  .  .  probably  eon- 
lain  mineral  deposits  as  valuable  as  any  yet  discovered." 
The  railroad  company,  the  committee  set  forth,  claimed 
that  the  legal  construction  of  the  act  of  1864  gave  the 
company  all  lands  within  the  grant,  not  kno-;\.'n  to  be 
mineral  at  the  date  of  that  act,  or  at  least  at  the  date 
when  the  company  filed  the  map  of  its  route. 

This,"  the  report  went  on,  "  seems  to  the  committee 
a  most  extraordinary  claim.  .  .  .  Many  of  the  most 
valuable  mines  in  Montana,  and  most  all  of  those  in 
Idaho,  have  been  discovered  since  1882.  The  company, 
not  satisfied  with  its  immense  land  grant  and  other 
special  privileges  given  by  the  Government,  now  seeks, 
upon  what  is  at  best  but  a  technicality,  to  take  from 
those  who  have  discovered  and  developed  them,  the  very 
mineral  lands  expressly  excepted  from  the  grant."  44 

Meanwhile,  however,  the  Northern  Pacific  Railroad 
had  gained  its  point.  While  time  was  being  consumed  in 
talk  and  appeals  from  court  decisions,  this  is  what  was 
done,  according  to  Senator  Pettigrew:  "The  whole 
force  at  Washington  in  the  Land  Department  at  Wash- 
ington was  engaged  exclusively  in  rushing  through  these 
patents  for  the  Northern  Pacific,  and  1  think,  if  you  will 
look-  up  the  court  records,  you  will  find  that  the  iudge 
objected  to  an  item  of  about  83.000  brought  in  by  the 
receivers,  which  was  paid  to  a  very  special  friend  of  the 
Land  Commissioner  as  an  attorney  fee  to  hasten  the 
issue  of  these  patents,  and  thus,  the  Northern  Pacific 
acquired  title  to  vast  areas  of  exceedingly  valuable 
mineral  land>  in  the  States  of  Montana.  Idaho  and  Wash- 
ington. The  Land  Commissioner  was  no  doubt  corrupt 
in  thi-  connection,  and  there  is  no  doubt  that  the  North- 

Secoml     Session, 


TIIF.     I1JIJ.     KOKTrXF. 

ern  Pacific  officials  really  purchased  his  activity  in 
getting  those  patents. 

"  Afterwards,"  ex-Senator  Pettigrew  continues,  ''  Con- 
gress passed  a  law,  some  time,  I  think,  in  1898,  provid- 
ing for  inspectors  to  inspect  the  lands  along  land-grant 
roads,  and  determine  which  were  mineral,  and  which 
were  not,  so  that  mineral  lands  should  not  be  patented 
after  that  date ;  but  the  mischief  had  nearly  all  been 
done."  45 

Pettigrew's  statements,  however,  are  disputed  by 
friends  of  Villard  claiming  to  have  a  knowledge  of  the 
matter.  They  deny  that  the  Northern  Pacific  thus  ob- 
tained patents.  Xo  patents,  they  assert,  were  obtained 
by  the  railroad  or  were  granted  to  it  during  the  prevail- 
ing agitation.  They  add  that  the  Commission  provided 
for  by  Congress  was  authorized  to  issue  patents  for  non- 
mineral  lands  only.  If  corruption  was  used  to  get  min- 
eral lands  under  the  pretext  of  being  non-mineral,  it  is 
unlikely  that  Yillard  personally  sanctioned  it. 

At  approximately  during  this  time  the  \orthern  Pa- 
cific Railroad,  on  August  15,  1893,  went  into  bankruptcy. 

•1:'  Related  in  a  personal  letter  to  the  author.  The  fact  that 
powerful  members  of  Congress  were,  at  the  same  time,  paid  at- 
torneys for  land-grant  railroad-,  and  acted  in  that  capacity  in 
Congress,  caused  the  introduction  of  a  bill  in  the  United  States 
Senate,  on  June  i,  i8S6,  by  Senator  Beck  of  Kentucky,  mak- 
ing it  unlawful  for  any  member  of  Congress  to  act  a-  the  at- 
torney or  agent  for  any  railroad  which  had  received  a  land 
grant  from  Congress.  In  the  debate  on  his  measure  on  June 
22,  1886,  Senator  Beck  urged:  "Will  any  gentleman  insist  that 
any  man  who  is  the  attorney  of  any  railroad,  any  man  who 
i-  retained  in  any  way  by  any  of  these  roads,  when  the-e  great 
questions  imolving  perhaps  fifty  or  a  hundred  millions  to  the 
tax-burdened  peoples  of  this  country  come  up  tor  consideration, 
-hall  advocate  the  interests  of  the  road  whose  money  in  the 
,-bape  01  retainers  or  fees  he  ha-  in  his  pocket,  keeping  the 
fact  concealed,  professing  all  of  the  time  that  he  is  acting  and 
arguing  in  the  interests  of  the  I'nited  States?"  The  bill  failed. 
of  course.  10  become  a  law. 


3<S4          HISTORY    01-     J  UK    C.RKAT    AMKKK'AX     FORTUNES 

On  the  plea  that  the  railroad  was  in  poor  iinanciai 
condition,  the  receivers  cut  the  wages  of  the  railroad's 
employees.  These  workers  knew  that  they  were  being 
thus  assessed  to  recoup  the  treasury  of  the  railroad 
lor  a  part  of  the  immense  sums  robbed  by  financiers; 
however,  they  made  no  official  complaint.  But  when  a 
second  curtailment  of  wages  from  fifteen  to  thirty  per 
cent,  was  announced,  the  workers  decided  that  they 
would  not  tolerate  having  to  suffer  for  the  depleted  con- 
dition of  the  railroad's  treasury. 

Un  numerous  occasions,  in  the  history  of  various  rail- 
roads, the  practice  had  been  common  of  compelling  the 
workers  to  make  good  whatever  portion  of  the  sums 
stolen  by  the  magnates  they  could  be  mulcted  for  by  a 
reduction  of  wages.  Yet  there  was  not  a  single  law  to 
protect  them,  nor  was  there  a  judge,  who,  knowing  and 
considering  the  circumstances,  issued  a  writ  preventing 
the  reduction  of  wages.  The  law  and  all  officialdom  al- 
lowed the  magnates  to  keep  their  booty.  Whether  the 
railroad  went  into  bankruptcy  or  not,  the  law  in  no  case 
restrained  the  magnates  from  reducing  wages  in  order  to 
make  up  the  deficiency  caused  by  their  own  thefts. 

I'ut  the  judiciary  were  quick  enough  to  stretch  the 
law  illegally  to  forbid  the  workers  going  on  strike. 
When  the  Xorthern  Pacific's  workers  asked  for  a  con- 
ference with  the  receivers,  the  latter  assented.  Clandes- 
tine]}', however,  attorneys  for  the  receivers  were  drawing 
up  a  sweeping  judicial  injunction,  which  was  presented 
to  Judge  Jenkins,  of  the  United  States  Circuit  Court, 
and  signed  by  him,  on  the  very  eve  of  the  arranged 
conference.  The  chief  attorney  in  the  authorship  of  this 
injunction  and  in  applying  for  its-  enforcement  wa< 
Senator  Spooner.  The  injunction  prohibited  the  men 
"  from  combining  or  conspiring  to  quit,  with  or  without 


nil-:  HILL  FOkTr.vK  305 

notice."  It  was  followed  by  a  supplementary  injunction 
forbidding  the  workers  from  "  ordering,  recommending, 
approving  or  advising  others  to  quit  the  service  of  the 
receivers." 

The  whole  proceeding  was  so  glaringly  illegal,  that 
the  Judiciary  Committee  of  the  House  of  Representa- 
tives was  forced  to  investigate  it.  This  committee  re- 
ported that  the  injunction  was  in  violation  of  a  consti- 
tutional provision,  an  abuse  of  judicial  power  and  with- 
out authority  of  law;"  that  Jenkins'  conduct  was  "an 
oppressive  exercise  of  the  powers  of  his  court,  and  an 
invasion  of  the  rights  of  American  citizens."  4('  Aside 
from  this  denunciation,  no  punitive  action  was  taken 
against  Jenkins,  Spooner,  the  receivers  or  any  other 
of  the  inculpated.  Meanwhile  the  injunction  had  done 
its  expected  service  in  terrorizing  the  workers  and  crip- 
pling the  effectiveness  of  their  strike. 

Yillard's  control  of  the  Northern  Pacific  was  over- 
thrown by  a  combination  of  opposing  capitalists,47  and 

•"''House  Report  ?\o.  1040,  June  8,  1804.  Second  Session. 
Fifty-third  Congress.  During  all  of  this  time  John  S.  Kennedy, 
"the  great  philanthropist."  \va-  one  of  the  largest  stockholder-; 
in  this  railroad. 

4TVillard  bought  the  Xe\v  York  Ercning  Post;  ami  his 
methods,  upon  the  acquirement  of  that  newspaper,  constituted 
both  an  exception  and  a  strong  contrast  to  the  methods  in- 
variably applied  by  other  capitalists  when  they  purchased  news 
paper  properties.  11<-  divested  himself  of  all  authority  nvcr 
that  newspaper's  editorial  policy  by  transferring  to  three  trus- 
tees the  absolute  control  in  that  respect.  At  no  time  did  he 
use  the  I'.rcu'.nq  /'.>.<,•/  to  influence  Wall  Street  opera:1.'!;1-:  in 
fact,  he  did  not  dictate  a  single  line  of  it<  editorials.  (In  the 
other  hand,  the  editors  at  time-;  frankly  criticised  \u<  policy  in 
railroad  affair1-. 

It  may  he  added  that  (to  the  author'?  personal  knowledge) 
the  Xew  \  ork  r.i'i'ning  Post  ha-  consistently  refused  to  he 
influenced  in  its  editorial  expn  -sions  by  either  the  offer  or 
withdrawal  of  department-store,  financial  and  other  advertising. 
it  has  maintained  this  course,  despite  very  heavy  losses  result- 
ing from  the  withdrawal  of  ~uch  advertising. 


386         HISTORY    OF    THE    GREAT    AMERICAN    FORTUNES 

iiill  gradually  began  to  figure  as  the  dominant  owner. 
It  is  pertinent  to  note  here  that  it  was  alleged  that 
Maginnis  was  secretly  in  the  employ  of  Hill's  Great 
Northern  Railroad  at  the  very  time  he  was  warring  upon 
the  Northern  Pacific. 

The  great  contest  between  Mill  and  Harriman  in  1901, 
for  the  control  of  the  Northern  Pacific  Railroad  has 
already  been  described  in  one  of  the  chapters  on  J.  Pier- 
pont  Morgan;  the  result  thus  far  has  been  (a?  hitherto 
related)  that  the  Mill  interests  remain  in  control  of  the 
Northern  Pacific  Railroad,  as  well  as  the  Great  North- 
ern Railroad  and  the  Chicago.  Burlington  and  Ouincy. 

According  to  Charles  Edward  Russell,  who  made  a 
very  careful  study  of  the  successive  stock  waterings  of 
the  Great  Northern  Railroad,  Mill,  Kennedy,  Lord 
Mount  Stephen,  Lord  Strathcona  and  other  magnates 
have  drawn  a  total  of  $407,000.000  profit  from  the  ma- 
nipulation of  stock  of  the  Great  Northern.  Russell  says 
that  this  sum  is  entirely  exclusive  of  all  dividends  inter- 
est and  other  emoluments.  These,  of  themselves,  have 
reached  enormous  sums.41*  A  committee  appointed  by  the 
Minnesota  State  Senate,  in  1907,  to  investigate  the  cap- 
italization of  railroads  in  Minnesota,  reported  that  these 
railroads  were  capitalized  at  about  8400,000,000,  or 
about  $50,000  a  mile,  whereas  the  actual  capitalization, 
on  an  average  cost  of  $27.000  a  mile.  >hould  be  $215,- 
000,000.  The  Great  Xorthern  Railroad,  owning  2.040 
miles  of  road  in  Minnesota,  was  heavilv  overcapitalized, 
the  committee  reported.  The  committee  declared  that 
the  Great  Northern  had  been  making  an  annual  profit  of 
-ixteen  and  a  half  per  cent,  estimated  on  a  valuation  of 
cost  of  construction  and  maintainarice  of  $33.000  per 


THE    HILL    FORT  TNI-:  3cSj 

mile.411  The  Northern  Pacific  likewise  largely  overcap- 
italized, had  been  deriving,  it  reported,  an  annual  profit 
of  twelve  and  a  half  per  cent,  on  an  estimated  valuation 
of  $35,000  per  mile.00 

One  of  Hill's  recent  stockjobbing  transactions  resulted 
in  a  suit  in  which  he  was  acctised  of  gross  fraud.  On 
July  22,  1907,  complaint  was  filed  in  the  county  court  at 
St.  Paul  by  Clarence  A.  Yenner,  a  stockholder, 'alleging 
that  on  November  i,  1900,  Hill,  as  president  of  the  (ireat 
Northern  Railroad  and  others  of  the  officers  and  di- 
rectors, had  entered  into  a  scheme  to  obtain,  in  con- 
junction with  the  Northern  Pacific  Railroad,  a  controlling 
interest  in  the  Chicago,  Burlington  and  Ouincy  Railroad. 
The  complaint  averred  that  on  April  23,  1901.  Hill  was 
authorized  by  the  Hoard  Of  Directors  to  make  the  pur- 
chase of  the  Burlington  at  $200  a  share,  which  he  did 
before  January  i,  1902,  in  conjunction  with  the  North- 
ern Pacific,  for  the  purpose  of  which  joint  collateral 
trust  fund-  were  issued  by  the  two  railroad.-. 

The  complaint  further  alleged  that  Hill,  knowing  of 
the  plan  to  purchase  the  lUirlmgton  bv  the  stockholders 
of  the  two  road-,  in  violation  of  his  dutv  as  an  officer 
and  director  of  the  (ireat  Northern.  "  hone-tly.  diligently 
and  laithfully  and  carefully  to  administer  the  atiair-  ot 
the  said  (ireat  Northern,  for  it-  best  interots,  conceived 
and  entered  into  certain  illegal,  wrongful  and  fraudulent 
plans  and  dc-ign-  to  make  a  large  profit  for  himself  per- 
sonally, and  at  the  expense  and  to  the  loss  and  damage 
of  the  (ireat  Northern,  bv  per-onally  purchasing  and 

ub 


cage.  Burlington  ami  Ouincy  Railway  Company,  which 
was  acquired  at  prices  far  in  advance  of  those  paid  by 
him  for  the  stock  by  the  (ireat  Northern  and  Northern 
Pacific  Railway  companies." 

Yenner  al>o  alleged  in  his  complaint  that  Hill  ac- 
quired a  personal  profit  out  of  the  transaction  of  an 
amount  exceeding  Sio.ooo.ooo  for  which  he  asked  an  ac- 
counting. AYe  are  unable  to  ascertain  Hill's  answer  or 
the  result  of  this  suit/'1 

Let  it  not  be  supposed,  however,  that  the  record  of 
Hill's  cumulative  acts,  as  revealed  in  -uccessive  law 
and  other  records,  has  interfered  in  the  slightest  with 
his  exalted  reputation.  Far  and  wide  his  sycophants 
of  the  press  do  still  loudly  -pread  their  fanciful,  rap- 
turous descriptions  of  him,  always  carefully  leaving  un- 
said the  true  means  bv  which  he  obtained  his  great 
wealth.  Much  has  been  made  of  his  piety:  his  giving, 
for  instance.  $500.000  for  the  endowment  of  a  Roman 
Catholic  Cathedral,  at  St.  1'aul;  much  is  incessantly 
written  of  his  exceeding  probity,  his  "  financial  acumen 
and  ''  business  virtues."  When  he  speaks  he  is  hailed 
as  a  veritable  oracle,  and  truly  so.  for  the  gods  of  present 
society  are  the  Money  Gods;  Society,  which  at  huge  ex- 
pense has  built  jails  and  prisons  for  the  petty  criminal. 

51  With  err  eat  frequency,  charges  have  been  made  that  rail- 
road attorneys  throughout  the  United  State?  often  write  the 
decision:  nf  judges  in  case?  affecting  railroads.  Many  such  spe- 
•::--d::l?.  have  lately  come  to  liuht.  Only  recently  the  (Irani! 
Jury,  of  Spokane,  Washington,  brought  indictments  for  ein- 
1  :x!ement  apainst  Judtre  M.  J-  Gordon,  former  western  counsel 
<  f  •' . ••  Great  Xortht-rn  Railroad.  The.  Grand  Jury,  at  the  same 
time,  denounced  Hill  and  other  Great  Northern  Railroad  of 
:  '  in  attempting  to  hamper  its  work,  and  prevent  the  in- 
•  t  of  Gordon,  and  it  further  censured  J ud ire  Milo  A. 
!•:  '  for  permitting  G"rd<in.  \vhilc  attorney  for  the  Great 
:'  rthcrn  Railroad,  to  write  an  opinion  in  a  ca?e  in  which  the 
railroad  was.  concerned.  This  opinion  Judge  Root  submitted  a> 
his  own. 


THE  IIILL  FURTL.NE  389 

creels  palaces  for  the  great  criminals,  and  insists  upon 
pouring  wealth  increasingly  into  their  coffers  and  hails 
them  dictators.  And  who  can  blame  the  magnates  for 
thus  mocking  and  scourging  the  peoples  who  thus  rever- 
ence them  and  the  system  which  produces  and  per- 
petuates them?  For,  not  they,  but  the  system,  should 
be  held  responsible. 

Comprehensive  Conclusions  would  IK-  premature  here; 
there  still  remains  to  be  told  the  narrative  of  how  Ivl- 
ward  II.  Harriman,  and  above  all.  the  Standard  '  >il 
Company,  for  whom  it  is  believed  he  so  largely  acted, 
possessed  themselves  of  vast  railroad  systems.  The 
Standard  (  )il  oligarchy  is,  indeed,  the  mightiest  railroad 
owner  of  all;  man\'  of  those  railroads  the  inception  and 
development  of  which  have  been  here  told,  are  owned  or 
controlled  by  it  ;  to  it  has  accrued  the  final  benefits  of  much 
of  that  series  of  original  frauds  and  thefts  some  picture 
of  which  has  been  given  in  this  work.  I'm  the  scope 
of  this  volume  does  not  here  permit  of  the  extended  nar- 
rative of  Ilarriman's  career,  with  its  accompaniments 
of  enormous  frauds  and  salutarv  constructive  work;  nor. 
more  so,  does  it  allow  the  prolonged  description  of  how 
the  Standard  Oil  Companv,  starting  with  a  few  oil  re- 
fineries,  contrived  to  secure  possession  oi  so  large  a 
share  of  the  resources  of  the  I.  nited  State-,  railroad- 
and  otherwise.  This  narrative  will  have  to  IK-  deferred 
to  later  volumes,  as  also  the  story  of  the  great  fortune- 
ba-ed  upon  public  franchises,  mines  and  industries. 

Meanwhile,  some  few  observations  mav  be  properly 
pertinent  and.  instructive. 

The   inevitable   burden   •   :    lii       wi-rk.   as    is    t<>o   pan: 
full      obvious,   has  been   the    frauds  and   thefts   by   what 


HISTORY    OF    THE,    GREAT    AMERICAN    FORTUNES 

tunes  built  up.  This  is  not  so  because  the  author,  in 
the  perverseness  of  his  heart  has  formulated  it  so,  but 
because  these  are  the  inescapable  facts.  But  why,  query 
certain  querelous  critics,  schooled  in  sychophantic  stand- 
ards, "enlarge  upon  the  dark  side  of  the  picture?  Had 
not  all  of  these  men  their  good  points,  their  kindly 
streaks,  their  capacity  for  some  doing  of  service  for 
their  fellow  men  ?  " 

Such  misguided  critics,  with  your  obtrusive  narrow 
conceptions  and  warped  mentality,  it  is  ye  who  so  blindly 
refuse  to  perceive,  and  do  justice.  What,  may  it  be 
inquired,  would  your  comment  been  had  this  work,  in- 
stead of  laying  bare  the  frauds,  shams  and  robberies  by 
which  immense  fortunes  have  been  amassed,  been  an 
artful  or  (for  the  matter  of  that)  an  ////artful  eulogy  of 
those  men,  and  an  apotheosis  of  the  system  creating 
them?  What,  indeed,  would  you  have  said?  Indubi- 
tablv  this  work  would  have  been  highly  "  rational  and  un- 
biassed ";  no  accusations  of  "prejudicial  treatment" 
would  have  occurred.  Conventional  publishers  would 
have  eagerlv  grasped  for  it  ;  •"'-  and  to  the  author  en- 
couragement and  monev  returns  would  have  been  as- 
sured. As  it  is  (what  is  really  of  no  interest  to  anvone 
but  himself)  he  has  had  to  undertake  it  in  the  face  of 
the  greatest  obstacles  —  a  fact  perhaps  tending  to  dem- 
onstrate that  he  who  proclaims  stern  truth  in  stern  garb 
must  do  it  for  its  own  sake,  and  with  an  titter  defiance 
of  all  supine  or  mercenarv  powers  that  would  seek  to 
change  hi-  plan  or  hold  him  back". 

Then  there  are  those  piping  critics,  overwhelmed  by 
the  proofs,  who,  as  a  last  resort  exclaim:  "Is  it  pos- 


THE    HILL    KOKTlXi:  30,1 

siblc  that  vour  facts  are  correct?      1  )u  vou  not  exau"er- 

•*  -  oo 

ate.'"  To  all  such  not  remonstration  nor  censure  but 
pity  should  be  extended  :  deep  pity  for  their  hemmed-in 
mental  horizon.  And.  after  all,  they  are  only  reflection-, 
or  rather  products,  of  a  certain  prevalent  standard  of 
the  day  which  priina  facie  condemns  the  man  with  the 
poor  appearance  as  guilty  of  all  the  offenses  charged, 
but  resolutely  declines  to  impute  serious  crime  to  him  of 
wealth  and  corresponding  superior  station,  regardle--, 
of  how  much  the  proofs  multiply.  Much  could  be  writ- 
ten upon  the  efficacy  of  a  high  silk  hat  as  a  protection 
of  person  and  reputation. 

When  the  author's  "  History  of  Tammany  Hall"  ap- 
peared, its  accuracy  was  not  questioned,  because,  per- 
force, the  facts  -i^cre  accurate,  and  the  story  there  told 
was  that  of  a  vulgar  political  organization.  How  singu- 
lar it  is.  remarks  one  perceptive  commentator,  that  -ome 
oi  tho-e  who  -o  highly  acclaimed  that  work  lor  its  com- 
prehensiveness and  accuracv,  should  be  the  very  critics 
who  now  insinuate  their  doubts  as  to  the  accuracv  ot 
fact-  when  applied  to  the  founders  of  great  fortune-  and 
their  verv  respectable  descendants.  Xo,  sage  reviewer, 
it  i-  hv  no  mean-  singular:  that  attitude  i-  transparent: 
the  truer  in  this  case  the  fact-  are  and  the  more  volumi- 
nous and  indisputable  the  citation-  from  official  records, 
the  more  the  apologists  and  retainer-  of  wealth  are 
driven  back  to  their  only  po--ible  defence.  Thev  can  do 
nothing  but  suggest  meaningless  doubt-  —  doubts  >o 
abundantly  refuted  by  the  formidable  mas-  01  citations 
throughout  tin-  work.  And  be  it  known  that  the  frauds 
and  robberie-  herein  de-cribed.  great  and  continuous  as 
thev  have  been,  are  far  from  bring  the  Complete  -lory: 
further  volume-  remain  to  be  written;  and  tor  every 
one  fraudulent  transaction  accidenialiv  coming  to  public 


39-2 


daylight. 

This,  it  is  unnecessary  to  say,  is  palpably  no  history 
of  personal  traits,  dispositions  or  temperaments;  it  is 
a  narrative  of  the  means  whereby  properties  have  been 
acquired,  and  great  fortunes  possessed.  .Hut  the  acade- 
mician, strong  in  the  audacity  of  his  soporific  mediocrity, 
may  say,  "  This  is  no  history ;  it  lacks  dispassionate 
style."  If  "  dispassionate  style  "  consists  of  a  dull  string 
of  dates,  names  and  phrases,  with  no  glimpses  of  the  roots 
of  matters,  nor  a  clear  interpretation  of  causes  and 
events,  then  this  work  does  certainly  want  "  dispassionate 
style,"  and  well  it  is  that  this  defect  is  there.  Who, 
indeed,  does  not  know  that  there  is  no  more  effective 
medium  for  inventing,  telling  and  perpetuating  false- 
hoods than  this  same  so-called  "dispassionate  style"? 
A  heightening  and  an  emphasis  of  certain  tissues  of  fact, 
a  .-lighting  concealment  of  other  facts,  and  behold!  the 
trick  is  done. 

While  on  this  point,  it  will  be  pardonable  on  the  part 
of  the  author  (considering  his  many  earnest  years  of 
original  research  )  to  express  his  unbounded  ama/ement 
that  so  m.'-iiv  pretentious  volumes,  theoretical  and  other- 
wise, have-  been  turned  out  by  college  professors  on  this 
subject,  without  their  having  taken  the  slightest  trouble 
to  ascertain  th-j  facts.  Hue-spun  dogmatic  theory,  mo-t 
of  it  is.  or  di-torted  high-sounding  assumptions;  word-, 
words,  nrj  end  of  turgid  words;  no  really  original  work 
or  thought,  no  in-ight,  no  interpretation  except  a  pseudo. 
illegitimate  one  arrived  at  \\ithoul  a  knowledge  of  the 
fact-,  and  so  ruriou-lv  iu  accord  with  the  dictate-  of  the 
ruling  \\ealih  of  the  lime.  Thi-  particular  hi-tory.  lie 
it  -aid,  i-  written  from  a  di-liuct  point  of  view,  narrating 


THK    HILL    FORTUNE  393 

facts  never  hitherto  brought  out,  and  the  accuracy  of 
which  cannot  be  challenged ;  the  point  of  view,  as  the 
author  believes,  is  the  correct  one,  verified  by  every 
accumulating  proof. 

Finally,  there  are  those  who  rush  forward  to  press 
this  question :  "  Have  not  the  founders  and  perpetuator-. 
of  the  great  fortunes  had  their  good  qualities?"  The 
question  is  arrant  superfluity;  so  they  have  had  and  have. 
But  do  the  good  people  who  are  so  solicitous  on  thi- 
score  ever  think  of  making  the  same  interrogatory  as 
to  the  hundreds  of  thousands  of  slum  dwellers,  or  of  the 
50,000  (or  so)  convicts  in  the  United  States?  Is  any 
consideration  or  extenuation  demanded  for  them.'  For 
the  poor,  the  wretched,  the  degraded  everywhere?  And 
yet  the  crimes  for  which  petty  malefactors  are  punished 
are  not  a  thousandfold  as  criminal  as  those  committed 
by  the  founders  and  holders  of  wealth ;  even  solitary 
murder  lapses  far  into  insignificance  compared  to  the 
never-ending  catalogue  of  the  mass  of  indirect  murder- 
brought  about  bv  the  greed  for  profit  and  wealth. 

All.  all.  capitalist  and  slum  dweller,  convict  and  multi- 
millionaire are  creatures  of  the  system  thus  causing  greed 
and  vice,  poverty  and  crime — -horrid  factor-  produced 
by  no  intrinsic  fault  in  human  nature,  but  by  the  im- 
petus, provocations  and  results  of  that  system.  All,  all 
have  infinite  capacitv  for  good,  were  it  but  given  favor- 
able environment  to  develop:  the  wonder  can  be  ex- 
pressed that  under  such  a  blighting  system  so  much  good 
does  exist.  And  those  magnates  who,  in  their  pomp 
and  vainglory,  think  that  they  rule  force? 
creature-!)  oulv  the  instruments  of  lorces. 
of  this  tumult,  this  rushirg  and  tramplim 
working  Purpose,  moving  forward  with  a 


3<J4         HISTORY    OI-    THE    GREAT    AMERICAN*    FURTU.X  F.S 

avarice,  their  corruption  and  fraud,  these  magnates  un- 
consciously have  been  doing  their  great  necessary  work 
in  these  times  —  the  very  vital  work  of  crushing  out 
hindrances  so  that  all  industries  shall  become  centralized, 
in  order  that  at  the  proper  day  the  whole  people  shall 
collectively  step  into  their  ownership  and  operation,  and 
artificial  classes,  with  all  of  their  attendant  hideous  evils, 
injustices  and  oppressions,  be  forever  abolished. 


END    OF    VOL.    Ill 


XOTE.  —  It  is  the  author's  plan,  at  a  future  date,  to 
describe  the  acquiring  of  railroads  by  Harriman  and  the 
Standard  Oil  Company,  and  to  deal  with  great  fortunes 
based  upon  public  franchises,  mines  and  industries. 


INDEX  TO  VOLUMES   I,  II   AND   III 

Adams.    Charles    Francis,   cited  —  Vol.    ll:ioi,   308,   310. 

Adams,  Samuel  —  Vol.  1:57. 

Adulteration  of  foods  and  drugs  —  Vol.  1 1  :  104-16:;,  200-291; 
Vol.  Ill  :  207-208. 

Agricultural  lands,  fraudulent  securing  of  —  Vol.  1:28-38.  132- 
134:  Vol.  II:  17-22,  32-37.  39-46,  78-91:  Vol.  111:314-334. 

Alabama,  land   frauds  in  —  Vol.   1:133;   Vol.   11:41-42. 

Alaska,  fraudulent  seizure  of  resources  in  —  Vol.  11  :  47,  92;  Vol. 
Ill:  307-3 1 o. 

Alaska,  alleged  corruption  regarding  purchase  of  —  Vol.   Ill:  31. 

Albany  and  Susquehanna  Railroad  —  Vol.  11:315:  Vol.  Ill: 
179-183. 

Alger.   Russell  A.— Vol.   1 1  :  40. 

Allen.   Samuel  —  Vol.    I  :  28-^0,   ^4. 

Allison.  Willi-im   B.— Vol.   Ill:  hi.  in,. 

Altgeld,  John    P.— Vol.   1:289:   Vol.    H  :  234-235. 

American   Express  Company  —  Vol.   11:269. 

American    Federation   of   Labor  —  Vol.    I II:  280. 

American  Fur  Company  —  Vol.  I:  112-114.  i  i(>-\  18,  124-125.  148, 
202;  prosecution  of.  Vol.  111:37-38,  342-340. 

American    Railway    L'nion  —  Vol.    1  :  282. 

American    L'nion   Telegraph    Company  —  Vol.    Il!:Si 

Ames.    (Jakes  —  Vol.    [1:360-361,   304.    366;    Vol.    I II:  in. 

Anthony.  Judge   J.    B..  cited  —  Vol.    II:  251  -252. 

Apprentice  labor   law  —  Vol.   1:77. 

Arizona,  ^reut   land   frauds   in  —  Vol.    fl  :  84-8*; ;   Vol.   111:323. 

Arkansas,   land    fraud-   in  —  Vol.    11:41. 

Armor   frauds  —  Vol.    (11:253-254. 

Armour,  J.  Ogden  —  Vol.    1  :  290. 

Army   supplies   scandals  —  Vol.   1 :  261  :    Vol.    11:293-297. 

Arthur.    President    Chester   A. —  Vol.    11:342. 

Astor.  John  Jacob  (founder  of  the  fortune')  -Vol.  1:40.  65. 
(•8;  has  the  free  use  of  five  million-  of  Government  fund-. 
Vol.  I  :  80 ;  ul-o  (•)-.  ico;  inception  of  fortune.  Vol.  liioij- 
[12:  debauching  and  swindling  of  Indian  tribe-.  Vol.  I: 
112-123:  hi-  enormous  profits,  Vol.  I:  124:  hi-  corruption 
of  officials.  Vol.  I:  t-5  :  Hfr  in  Xew  York.  Vol.  1:  126:  im- 
nnmitv  from  puni-hment.  Vol  1:127-128;  use  of  Goveri 


396  INDEX 

becomes  America's  richest  man.  Vol.   1:194-197;  death,  Vol. 

1:198-199;    also   Vol.    1:242-243,   245,   258;    how   he   caused 

Government  officials  to  be  dismissed  from  office,  Vol   1 1  :  84 ; 

also  Vol.   11:286;   Vol.   111:37-38,   103,   167;    further  details 

of  his  debauching  and   swindling  of   Indians.   Vol.   111:342- 

349- 

Astor,  John  Jacob  II  —  Vol.  1:224,  233,  234. 
Astor,  John  Jacob,  Jr.,   (son  of  William   B.) — Vol.   1 :  209,  212; 

Vol.   II:  151;   Vol.   III:8i. 
Astor,  John  Jacob,  (son  of  William)  — Vol.  I  :  234,  240,  251  ;  Vol. 

111:274- 

Astor,  \\  illiam  —  Vol.   I  :  224,  225,  229,  233-234. 
Astor,  Mrs.   William  —  Vol.  1:239. 

Astor,   William   Waldorf  —  Vol.    I:  220-221,   234,   240-241. 
Atkinson,  Henry   M.— Vol.   11:88. 

Bacon's  Rebellion  —  Vol.  1 :  27. 

Baer,  George  F. —  Vol.   11:254. 

Bailey,  Dr.  M.  J.,  cited  —  Vol.  II :  290. 

Baltimore  and  Ohio   Railroad  —  Vol.   11:203-204:   Vol.   III:ii8- 

123. 

Ballinger,  Richard  S.—  Vol.  II :  47. 
Bank  of  America  —  Vol.  I:  162,  165. 
Bank  frauds  and  corruption  —  Vol.  1:89,  161-163;  Vol.  11:29. 

300;  Vol.  Ill:  183-189. 
Bank  of  New  York  —  Vol.  I:  160,  254. 
Bank   of   the   United    States- — Vol.    1:86;    extensive   bribery   by, 

Vol.  1:88-89,  160,  193,  194,  243,  244;  Vol.  11:29. 
Barber,  James   D. —  Vol.   II:  321. 
Barbour,  James  —  Vol.    I:  115. 
Baring  Brothers  —  Vol.   1:86. 
Barlow.   General   Francis   C.—  Vol.   11:315. 
Barnard.  Judge  George  C. —  Vol.  11:307-309.  315. 
Barrett,    Walter,   cited — Vol.    1:66,    78,   80,    109/246. 
Bayard.    Nicholas,   obtain.-;    arreat   estate   by   bribery — •  Vol     I  •  33 
Bayly,  Thomas   H.— Vol.   111:28-29. 
Beach,    Moses    Yale  — Vol.    I  :  195. 
Beaubin   and    Miranda    land  grant  —  Vol.    II:  84-^5. 
!  ellamy.   Captain,   sea   pirate  —  Vol.    I  :  150. 

eilnmont.     Farl    of  —  Vol.     1:28;     attempted    bribery    of.     Vol. 
I:  20-30:    expo-es    corrupt    grants.    Vol.     I:  ^2-34,     36;    also, 
Vol.   I  :  =52,  14. 
!  Hmont,   August  — Vol.   Ill:  189,  222.  274. 

niton.   Thomas  —  Vol.    I:  12",    i  ;o. 

iddle,   Nicholas --Vol.    1:244:  Vol.   TIT:  18^-186. 

Big   Four"   Railroad       Vol.    !I  :  243. 

in'jhatn,    [ohn  —  Vol.    I  :  14.}.    147. 

fMieim    and    Gold.-cliniid!  -    Vol     III  •  186 
-  Bbi-k    Friday  "—  Vol.    M  :  ^25.    U3    ^36 
i  iaine.    Fan  ••-   G.       Vnl     II  :   ••'_>:    Vol.'  Ill  :  43. 
Vol,    111  :  102,    i  i  I. 


INDEX  397 

Blair,  Jolin  I.—  Vol.  11:357,   }6o  ;   Vol.   Ill:  102-119. 

Blair.  John  T.—  Vol.  Ill:  Hi. 

Blake.    Luther,   cited  —  Vol.    I  :  133. 

Bonded   laborers  —  Vol.  J  :  50-5  J,  77. 

Booth,   Governor   Newton,   cited  —  Vol.    ill  :  139. 

Boston  and  Albany  Railroad  —  Vol.   11:269-270. 

Bout  well,  George   S.  —  Vol.   11:338-341. 

Bowne.  Robert  —  Vol.  1  :  109. 

Broadway    surface   railroad    franchise  —  Vol.    11:142-144. 

Brevoort,   Henry  —  Vol.   1  :  196. 

Brooks,  James  —  'Vol.   11:365. 

Brooks,   Peter  Charndon  —  Vol.   1  :  61-62. 

Brown   Brothers   and   Company  —  Vol.   Ill:  50-60. 

Brown,   K.   1).—  Vol.   1:214. 

Brown.   Nicholas  —  Vol.   I  :  63. 

Bryce.  James,  cited-  —  Vol.   11:217. 

Buchanan,  Thomas  —  Vol.   1:243. 

Buford,   John,    cited-  —  Vol.    11:  130. 

Burgess.  Captain   Samuel,  sea  pirate  —  Vol.   1:38,  47,   139,   141. 

Burr,  Aaron  —  Vol.  1:  161,   166-167. 

Butler,    Cy  r  u  s  —  Vo  1  .    I  :  60-6  r  . 

Butler.  Samuel  —  Vol.  1  :  60-61. 


Cabot.  George  —  Vol.  I:  "-58,  59. 


Caldwell.  Luther  —  Vol.  II:  311. 


California,   great    land    frauds    in 


Vol     11:78,   80,   82-84-    Vol 


Canal    land    grants    fraudulently    manipulated  —  Vol.    11:24-27. 
Calumet   and   Hecla    Mining  Company,  copper   lands   obtained   by 

fraud  —  Vol.   II  :  27. 
Cameron,    Don  —  Vol.    11:297. 
Canada   Southern    Railroad  —  Vol.    II:  162. 
Cardelli.    Peter  — Vol.    1  :  137. 
Carey,   Matthew,  cited  —  Vol.   1:93. 
Carnegie.    Andrew  —  Vol.    111:253-264. 
Carter,   Robert  —  Vol.    1:40-41. 
"  Ca-h   Sales  "  Act  —  Vol.    II  :  41-42. 
Cass.    Lewis  —  Vol.    I  :  i  14.    118;    evident    corruption    of,    Vol     I- 

125,   130:  Vol.   Ill  1346-347. 
Cassatt,  A.  J. —  Vol.   111:95-97. 
Castellane,   Count    de  —  Vol.    111:92. 
Cairo,,.  T.  R  — Vol.  11:85. 

Cedar   Rapid-   and    Mi-'-ouri    River   Railroad  —  Vol.   Ill -114 
Ci    tral   Pacific  Railroad —  Vol.  11:43:  Vol.  Ill  :  128-145. 
Central    Railroad  of   New  Jer-ey — Vof    11:245. 
Chartered   Companies   in   Settlement   Times  —  Vol.    I:  11. 
Chase.  Salmon   P.,  cited  — Vol     II:  128.    341. 
Chaves,    Ignacio  — Vol.    II  :  87. 
Chesapeake    and    Ohio    ("ana!    Company  — Vol.    11:24.    26;    Vo1 

III   :    121  -I  22.     !-2. 


398  INDEX 

Chemical  Bank,   frauds  of  —  Vol.   I:  163,  243,  244,  246. 
Chicago,   Milwaukee  and   St.   Paul  Railroad  —  Vol.   111:32,  43. 
Chicago    and     Northwestern    Railroad  —  Vol.     II:  210-211,    323; 

Vol.  Ill :  112,  236. 

Chicago,   Rock   Island   and   Pacific   Railroad  —  Vol.    Ill  1114. 
Churchman,   Samuel  —  Vol.   11:293-294. 

Chicago,   Burlington   and   Quincy   Railroad  —  Vol.    111:239. 
Cincinnati,   Hamilton   and   Dayton    Railroad  —  Vol.    111:233-235. 
Civic   Federation  —  Vol.   11:246. 
Civil   War  corruption  —  Vol.   I  :  261  ;   Vol.   11:127-138,   285,   291- 

298,  358-359;  Vol.  Ill:  135.  150-152,  160-162,  164-1/6. 
Clapp,  Asa  —  Vol.  1:59. 
Clark,  General  William  —  Vol.  1 :  120. 
Clark,  William  A.,  U.  S.  Senator  —  Vol.  II :  71. 
Cleveland,    President   Grover  — Vol.    1:283;    Vol.    111:1/6,   223- 

225,  336. 

Cleveland  and   Pittsburg  Railroad  —  Vol.   11:285. 
Clews,  Henry  —  Vol.  Ill  :  61. 
Clinton,  Governor  George  —  Vol.   1:152. 
Clyde.   Thomas- — Vol.   Ill:  161-162. 
Cloud.   D.   C,   cited  — Vol.   11:189;   Vol.   Ill  :  151. 
Coal    lands,    fraudulent    seizure   of  —  Vol.    11:32,   42,   46,   47,   83, 

251-252,  367:  Vol.   111:68.  74-75-  93.  217. 
Coal  Trust  — Vol.  11:253-254;  Vol.  111:216-219. 
Colder),    Cadwallader  —  Vol.    1:26. 
Collins,   E.   K.— Vol.   II:  114-118,   122:  Vol.   111:26. 
Colorado,  great  land  frauds  in  — Vol.  II  :  80-8 1.  83-89,  367:  Vol. 

Iff  :  75,  93.  314.  324-334; 

Colorado  and   Southern   Railway  Company  —  Vol.    111:99. 
Colt,  Samuel  • —  Vol.  Ill  :  25-26. 

Confiscation,   attempts   at   in    Settlement    times  — Vol.    1:37-38. 
Congress,  corruption  of  — Vol.   11:32-47.  298-299,  357-366;   Vol. 

111:24-33;  45~4r>,  5fX>2,  7-2-73-  77.   1 13-115.    [3'-T32.   134-136. 

320-321,  357.  383. 
Conkling,   Roscoe  —  Vol.    11:176. 
Connolly,   Richard   11. —  Vol.    1  :  212.  213,  214-216. 
Consumers'  League  —  Vol.    1:271. 
Cooper.   Peter  —  Vol.   I  :  195. 
Cope,  Thomas   Pym  —  Vol.    1:63. 
Copper    deposits,    fraudulent    seizure    of  —  Vol.    1:134:    Vol.    II: 

26-27:    Vol.    Ill  :  307,  324-325,   350-352.  373,   377-383. 
Copper    Oueen    Minintr    Company — Vol.    II:  ^43. 
Corbin,   A.    R.— Vol.    11:329-330";  Vol.    111:26.  * 
Corcoran   and    Ricixr-  —  V"l.    111:27-31, 
Corcoran,   William   \\'.—  Vol.    111:27-31. 
Corruption  at   the  polS    -Vol.   I:  191-194;   Vo 

Corning,   Rrastus  —  Vol.  1 1  I  :  44. 
Corwin,    Robert    G.--Voi.    1  H  :  30. 
Corwin,   Thoma.-   G. —  Vol.    1 1 1  :  30.    153. 


INDF.X 


Cosby,   Governor  —  Vol.    I  :  253. 

Court    of   Claims   decisions  —  Vol.    II  :  121-122,    129-130.    137-138; 

Vol.    Ill:  174-17=;. 

Credit    Mobilier  —  Vol.    11:359-366;    Vol.    111:77,    114.    115. 
Crocker,   George-  —  \rol.    11:360:   Vol.    Ill:  124-141. 
Croffut,   W.  A.,  cited  —  Vol.   II:  no,   123,   132,   144.    146,   161,    185, 

195.   197.  -'i  6. 
Crooks  and   Stewart   (Astor's  agents  among  Indians)  —  Vol.   II: 

84:   Vol.   HI:  345-346. 
Crosby  William    B.—  Vol.  I:  195. 
Crosswell,    Kdwin  —  Vol.   II:  117. 
Cunard,   Edward  —  Vol.    I:  210;   Vol.   II:  151. 
Custom-house    frauds  —  Vol.    1:134-13;;    Vol.    IT  :  338-330,    342: 

Vol.   Ill:  153-158. 

Dabney,   Morgan   and   Company  —  Vol.    111:66. 

Dana.  "Charles  A.—  Vol.   II  :  68" 

Davidge,  William    II.  —  Vol.   II:  121. 

Davit's,   Thomas   E.  —  Vol.    IF:  142. 

Davis.    Henry  G.—  Vol.   Ill:  312. 

Davis.    Xoah  —  Vol.    11:339. 

De    Beaumont,   cited  —  Vol.    I  :  1/7-170. 

Debs,  Eugene  V.—  Vol.  I:  282-283. 

Debt,   imprisonment    for  —  Vol.    1:71-73,  81. 

Delaware    and    Hudson    Railroad  —  Vol.    11:247.    252;    Vol    111: 

180. 
Delaware,    Lackawanna    and    Western    Railroad  —  Vol.     [1:221, 

247,   252:   Vol.    Ill  :  104-108. 

Delaware   and    Western    Railroad-  —  Vol.    II:  221. 
Delins,   Godfrey,  obtains   land   grant   by    fraud  —  Vol.    1:33.  .37- 
Denver    Pacific    Railroad  —  Vol.   111:71-72. 

Denver   and    Rio   Grande    Railroad  —  Vol.    111:74,   o<>-ioo.   328 
Denver.   Souih    Park  and    Pacific   Railroad  —  Vol.    Ill:  08-69. 
Depew,  Channcey  .M.  —  \"ol.   II:  71.   176-178,  220:    Vol.   Ill:  210. 
Deposit   Act  —  Vol.    II  :  81, 
Desert    Land    Paw  —  Vol.    11:35-37.   30.   46. 
De-    Moine-    Xavigation    and    Railroad    Company,    bribery    by  — 

Vol.    1  1  :  209;   Vol.    Ill  :  27.    i  13. 
De   Tocqueville,   cited—  Vol.    I:  177-170. 
Dillon.    Mm    F.—  Vnl.    Ill:  40.   54. 
Dillon.   Sidney-  -  Vol.  Ill  :  65.  07-^0.  71. 
Dixon,   Frank   11..  cited  —  Vol.   Ill:  117. 
Dodue.      \\'illiam      E.--  Vol.      I:  211:      extensive      custom      hou-'.1 

frauds  --  Vol.    II  :  ^^44.    \4<  .    »?8;    also    Vol.    Hi  : 
Dodge.    William    E.    Jr.—  Vo]     !:nS-    customs    frauds.    Vol.    11: 

339  344,  340. 

Dolan.   Thomas—  Vnl.    II  :  250. 
Donuan.   Governor  —  \'ol.    I:  ;_]. 

loday.   !  ieneral   Thj  ma-    D  .  cited—  Vol.    II  :  130. 
Dougherty.   Thomas  J.  -   \"ol.    I  :  124 


4OO  JXDF.X 

Dow,   Premiss  — Vol.  111:38. 

Draft  Act  during  Civil   War  —  Vol.   II:  131-132, 

I) red   Scott   decision —  Vol.   I  :  188. 

Drew,   Daniel  —  Vol.   11:153-154.  303-313. 

Drew,   Wolcott.   cited  —  Vol.   11:251. 

Drexel.   Anthony  —  Vol.   Ill :  2ig. 

Drexel,  Frank  —  Vol.  Ill  :  219. 

Drexel.  Morgan  and  Company  —  Vol.  Ill  :  189. 

Dubuque  and   Sioux  City  Railroad  —  Vol.   Ill:  113-115. 

Dutch   East   India   Company  —  Vol.   I  :  15. 

Dutch    \Yest   India  Company  —  Vol.   1:14-15,   18-19. 

Eastman,  Arthur  M. —  Vol.   Ill:  170. 

Edmonds,  John   M.,   cited  —  Vol.   1 :  180. 

Elections,  corrupt    ('see  corruption  at  the  polls). 

Elkin?.  Stephen  B  — Vol.  II  :  71,  84-86,  88,  210;  Vol.  Ill:  29,  the 

narrative  of  his  career,  311-337. 

Ely.    Profe.-sor    Richard   T.,   cited  —  Vol.    11:217-218. 
Equal   Rights   Party — -Vol.   I:  174. 
Equitable  Eifc  Assurance  Society  —  Vol.   II:  178:  corruption  and 

frauds,   Vol.    111:266-2/7,   purchase  by  J.    Pierpont    Morgan. 

306'. 

Erie   Canal  —  Vol.    11:24,   255,   266. 
Erie    Railroad  —  Vol.    II:  153,    162,   302-325.   329,    337,   352:    Vol. 

Ill  :  121.   231-234. 
Estancia  land  grant  —  Vol.  11:87. 
Evans.    Captain     R.    X.,    secures    land    grant    by    bribery  —  Vol. 

I  :  32-33- 

Everett,    Edward,   cited  —  Vol.   1:92. 
"Exchange  of  Land  Law" — Vol.   11:43-46. 

Farley,  Jesse   P.— Vol.   111:54,  55,  359-368. 

Farnham  and  Davenport  (  Astor's  agents  among  Indian  tribes)  — 
Vol.  I  :  121. 

Farmers'  Alliance  —  Vol.    11:226.  241. 

Federation    of   Trades   and    Labor    Lnions —  Vol.    11:225. 

Feudal  estate —  Vol.  I:  18-21;  passing  of,  42;  continuing  con- 
dition^ of,  45-46:  disintegration  of.  97-100. 

Ftudal  grants  — Vol.   I:  14-22. 

1-Yudal  tenuiv-  a'loli-hed —  Vol.  1 :  99-100. 

Field.  Cyrus   \Y.—  Vol.   Ill  :  82-85. 

Fit-Id.   Henry    r  c-randso-i  of  Marshall)  — Vol.  1:293-29;. 

Field.   Marshall    III  —  Vol.   1:293.  29;. 

Fielden.    Samuel— Vol.    II  :  230-234. 

Fir-t    Division.   St.   Paul   and    Pacific   Railroad  —  Vol.   111:48-56. 

Fisheries  of    \~e\v    Enirland  — Vol.    1:52-54. 

Fi-k.    fames    Jr.-     Vol.    1 1  :  ^o:-?^.  366-367;   Vol.   111:170-183. 

Fithian,   Philip   Vickcrs.  Cited  —  Vol.  1:41. 

Flatrg.   Controller  —  Vol.   I  :  147. 


JXDIiX  40; 

Fletcher,   British  governor,  corrupt   land  grants  by  —  Vol.   1:25, 

32-34,  38-39.  52,  141,  143,   146. 
Florida,   land    frauds   in  —  Vol.    11:41-42. 
Foord,  John,  cited  —  Vol.    11:  161. 
Forest    Reservation    Bill  —  Vol.    11:45. 
Forsyth,  Thomas,  cited  —  Vol.   I:  120-122. 
Franklin.   Benjamin  —  Vol.   1:43. 

Frauds  in  import  duties    (see  custom  house   frauds). 
Fraudulent    substitution    in    trade  —  Vol.    1  :  66-67  :    Vol.    II :  164- 

166,   289-291;    Vol.    1 1 1  :  207-208. 
Frick.    I  lenry    C. —  \"ol.    111:95,   255,  274. 

Gardiner.  George  11. —  Vol.  Ill:  20-31. 

(iaresche.  V.   .M.,  cited --Vol.   I:  132. 

Garfield,    President   James    A.— Vol.    11:362;    Vol.    111:43- 

Garfiekl.  James  R.  (son  of  precedine.  and  Secretary  of  the 
Interior  )  —  Vol.  1  I  :  47. 

Garrett,   John    \Y..   an   outline   of   his   career  —  Vol     III:  118-122. 

Garrett,  Robert,  son  of  preceding  —  Vol.  II:  203-216;  Vol.  Ill: 
123. 

Garrison,   William   Lloyd  —  Vol.   1:225. 

George.  Henry  —  Vol.   11:235.  230. 

Georgia,  land   frauds  in — Vol.   1:133-134;  Vol.   11:  17. 

Georgia    Mississippi    Land    Company  —  Vol.    II  :  17. 

Girard,  Jean  —  Vol.   1:8;, 

Girard.   Stephen  —  Vol.    1:66.  68.  82-02,  257. 

Goddard.  Luther   M. —  Vol.   1 1 1  :  99-100. 

Goelet    estate  —  Vol.    1  :  107,    148,    105,   224. 

(ioelet.   Jacobus  —  Vol.    1:242. 

Goelet.  Ogden  —  Vol.    1:247-248. 

Goelet,   Peter  — Vol.  I:  212,  242.  243-244.  246. 

Goelet,   Peter  P. —  V<>!.    I  :  07.   100.   14;,.   164,  245.  244.  246. 

(ioelet,   Robert  —  Vol.    1:    104,   247.   248. 

Goelet,    Robert    R. —  Vol.    1:24^-244.   24'). 

Goelet,    Robert    Walton— Vol.    I  :  251. 

••  Gold    Conspiracy  "-  -  Vol.    11  :  326-^327. 

Gon/ales,   Salvador  —  Vol.    11:86-87. 

Goodchild,    Rev.    F.    M..  cited  -  -  Vol.   1:272. 

(  loodyear,   Charles  -     V  <!.    I  :  135. 

(, onion.    William    M..   cited  — Vol.    I:  119-120. 

Gorges.  Sir  Fernandino  —  Vol.  I:  31. 

Gorman.  Governor  W.   A.,  cited  — Vol.  111:46. 

'  ;ould,   Anna  -    Vol.    Ill:  02 

Gculd.   George  J.    (son  of  Jay)  —Vol.   Ill:  95-101,  210,  2'>i.  274. 

Gould.  Jay  (founder  of  the  fortune)  —  Vol.  11:69,  154-150.  iSo. 
180.  205:  t lu-  narrati'  n  of  In-  career,  j^i-.rS;  hi<  career 
further  described  in  \~  •' .  [11:56—57,  62  04,  <y>.  100,  1^8.  1.13: 
hi-  content  \vith  I  Pierpotu  Morgan.  Vol.  Ill:  170-18;. 

Gram.    Pre-ident    LMyWs    S.— Vol.    II:  3^)-.^:    Vol.    Ill  .-26. 

Grav.   \\';'':     M     -  Vof.    i  :  oj. 


4O2  IXDKX 

Grazing    lands,    fraudulent    seizure    of — Vol.    11:36-37,    78-91. 
Great    Northern    Railroad  —  Vol.    II:  71,    343;    Vol.    Ill :  239,    368. 

370,  .#6-388. 

Grceley,    Horace  —  Vol.    I  :  181  ;    \'ol.    Ill:  160. 
Green,  Andrew   F. —  Vol.    1:213. 
Crimes,   L'.  S.   Senator,  cited  —  Vol.   11:  134-137. 
Guilbert,  Charles   11.— Vol.   11:257. 
Gnggenheims,  The  —  Vol.   II:  71:  Vol.   111:308-309. 

TTaight,  Governor  H.   !!.,  cited  — Vol.  Ill:  138. 

Hale.   I'nited  States  Senator,  cited  —  Vol.  if:  135. 

Hamilton,    Alexander  —  Vol.    I  :  168. 

Hamilton,   Andrew,   lobbyist  —  Vol.    Ill: :  271. 

Hammond's    "Political    History    of    the    State    of    New    York." 

cited  —  Vol.   I  :  162-163. 
Hancock,  John  —  Vol.    I  :  =57. 
Harriman.   Edward   H.— Vol.    [  :  251 ;   Vol.   11:277-278,  281;  Vol. 

Ill  :f>4,  73,  76.  95.  IT.>   144-  234,  238-243,  246,  269. 
Hartley,    Marcellus  —  Vol.    II  :  295  ;    Vol.    111:168-169. 
Harvier.    Krnest.  cited — Vol.    11:26;. 
Hatzfeld.   Prince— Vol.    Ill  :  144. 
Havemeyers,  The  — Vol.   II:  95:  Vol.  111:227-228. 
Hearst.   George  —  Vol.    If:  71. 
Howes.   Joseph  —  V<>1.   [  :  ^7. 
Hewitt.  Abram   S.— Vol.   Tl  :  258. 
Hicks,   Russell    P.—  Vol.   II  :  311. 
Hill,    James    J.— Vol.    1 1 1  :  =;6,    93.    238-243;    his    career    in    full, 

338-388. 
Hoffman'-     "Stale     and     Ri^ht^     of     the     Corporation     of     New 

York,"   cited  —  Vol.    I  :  167. 
Holmes,  J.   A.,  cited  — Vol.    I  :  294. 

Holt,   Joseph,   cited  — Vol.    II  :  181  ;    Vol.    Ill:  167.    173. 
Hopkins    Edward   C— Vol.    111:48-49. 
Hopkin>,    [ohti— Vol.    Ill  :  118-123. 
Hopkins,  Mark—  Vol.   HI  :  124-141. 
Houghton.     Walter    R.,    cited  — Vol.    1:84-8;.    87,     132-133.    2^. 

256,  284:    Vol.    Ill  :  26. 
Howard,  J.   H.,  cited  —  Vol.   I  :  133. 
Hud-on    River    Railroad  —  Vol.    II  :  I.s6-r6i 
ilu^he.-.    Andrew,   cited  —  Vol.    I:  118-110. 
I  I mn,    Washington— -Vol.    HI  :  4^. 
Ihmtington,    Coll  is    P.— Vol.    H:i8o.   360;    Vol.    TIT —7,   St.    91. 

93:   the  narrative  of  hi-  career.   Vol.    HI:  124-144. 


IXDliX  403 

Indians,    debauching    and    drefrauding    of  —  Vol.     1  :  48-49,    5-!- 

[32-134;  Vol.   [1:84;  Yo!-  HI:  167.  342-350. 
Industrial  "  Accidents  "—  Vol.   1:294;   Vol.   11:23^,  2/1-2/2;  Vol. 

Ill  :  i  y;,  284-285. 
InduMrial    Commission    (U.    S.),   cited  —  -Vol.    1  :  271  ;    Vol.    Ill: 

64-65.  232-233. 

1  nsurance    frauds  —  Vol.   Ill  :  266-280. 
International   Prison  Association  —  Vol.   II:  167. 
Interstate    Commerce   Commission  —  Vol.    II:  250,   252,   256,   271- 

272:  Vol.   Ill  :  74-76. 
Inventors,    defrauding    of  —  Vol.    I:  132,    i^  ;    Vol.    II:  180-181: 

Vol.   Ill:  165-166. 

lo\va   (Yntral    Air   Line  —  Vol.    111:114-115. 
Iowa   Constitutional    Convention  of    1857  —  Vol.    II  .'31. 
Iowa,    great    land    frauds    in  —  -Vol.     11:299;     Vol.     111:27,    58, 

109-1  15. 

Iowa,   legislative    bribery  —  Vol.    II:  31;    Vol.    ill:  110-117. 
Iron    deposits,    fraudulent    securing    of  —  Vol.     11:^2-^,    41-42; 

Vol.   Ill:  75,  202,  377-38.3. 
Irons,   Martin  —  Vol.    111:89. 
Irwin,   Richard   R—  Vol.    111:62. 

Irwin.    Matthew,   cited  —  Vol.    1:112-113.    119;   Vol.    111:343. 
Ivins.  \ViIIiam   X.  —  Vol.   1:231. 


.  - 
Jrfferson.  Thomas  —  Vol.   1:42,    193. 

lYrome,    William   "I'ravers  —  \'ol.    111:276.  204. 
Jesun,   Morris  K.  —  Vol.    Ill:  no. 

[onnson,    Henry,   I'.   S.    Senator  --  Vol.    I:  no;   Vol.    Ill-  ^4  \ 
Johnson,   Henry  C—  Vol.   11  :  344. 
Jordan.    IvKvin  —  \'ol.    Ill:  154-155. 
Judiciary,  corrupt  ion  of  —  Vol.   I:  iS8-iS'j.  283;   \'<'\     11:307-30). 

153;  Vol.   [11:76  77,  S.j-S;.  05,  <>•>  -no.    ^ 
Julian,'  George  \V..  cited     -  Vol.    II  :X8;    Vol     111  :  332  .^33. 
justice,   1'bilip  S.  —  Vol.   11:  129-130. 


Ki-rcns.    Richard    C.-  Vol.    Ill  :  ^35, 

Kidd.  Captain    U'illiam.   sea-piratV—  Vnl     [•  r.   =2 

Kinkbead,  Govi-nu.r  John    I!.,  cited    -  Vol.    [11:  '130 

Kipp.    Solomon,   bribr-    New    \"ork   City   C'ommon    Council        \' 

II:  140. 


404  IXDF.X 


Labor    I 'arty- — Vol.  11:237-240. 

Labor   .Movement  of   1886 — Vol.  11:224-241. 

Lac   La    Belle  Ship   Canal   Company — Vol.   11:25. 

LaCrosse  and   Milwaukee    Railroad  —  Vol.    111:31-43,   57. 

LaFollette,   Robert   M.,  U.   S.   Senator,  cited  —  Vol.   111:277,  289, 

295-296. 

Lake  Shore  Railroad  —  Vol.   II:  162,   170,  266-268. 
Land,    corrupt    obtaining    of    in    Settlement    times  —  Vol.    1:25, 

28-39. 
Land   frauds  —  Vol.   I:  120,    132-133;   Vol.   11:17-49,   78-91,  251- 

252,  298-299,  301,  354-368;  Vol.  111:24-25,  32-38,  66,  75.  77, 

167,  314-334.  3.50-357.  377-383.. 
Land    grants,    corrupt    securing   of  —  Vol.    1:25,   28-39,    132-133; 

Vol.    II:  17-18,    19-22.    26-27,    32-49.   63-64,   77-91,   356,   358- 

359,  361-362;  Vol.   111:24-25.  32-38,  66,  77,  109-116,  131-138, 

I: 23-41. 

-Vol.  Ill:  115-116. 
117,   141-144- 
57- 

I  :  49- 

Lehigh  Car  Manufacturing  Company  —  Vol.  III:-:. 
Leiter,  Levi   Z. —  Vol.    1:259-261. 

l.-ui^lative   corruption  —  Vol.    1:89,    141,    181,  209-211,   245;   Vol. 
I  I  :  2(>,   30-32.    132.    142.    146-147,    149.    155-160,   202,    204,   264, 
269.   310-317,  321-322,  350;    Vol.    II  I:  19.  32-42,  46-51.   72-73. 
82-83,   05-   9-6-1)7,    99-100.    106-108,    120-122,    128-131.    162-164. 
217-218.  256,  2/0-273.  3i;.j. 
Lehigh   Valley  Railroad  —  Vol.    11:245,  252. 
Lenox,    Robert  —  Vol.    1  :  148. 
Leupp,  Charles  M.— Vol.  11:284. 
Lewis,    Francis  —  Vol.    I  :  57. 
"  Lexow   Committee'' — Vol.    II  :  350. 
l.imantour.    Jose     (great    land    grant)— Vol.    11:78;    Vol.     Ill: 

320. 

Lincoln.  Abraham  —  Vol.  II  :  132. 
Lincoln,  Robert  T. —  Vol.  1:279. 
Lindsay,  Judge  Men  B.,  cited  —  Vol.  ITT:  99-100. 

Lewis   _  V<>1.   11  :  230-234. 
num.    Mcnianiin    F.,  cited — Vol.   1:132:   Vol.    IT  :  21. 
-pcnard.   Anthony  —  Vol.    I  :  168. 
estate  —  Vol.    I  :  <x8. 
John,  cited  —  Vol.   IT  :  303. 
Robert  —  Vol.    1:34-35.    ^7-38. 
•s  — Vol.   I:62. 
LeGrand  —  Vol.   Ill  :  60-62. 
inipany.  The        Vol.   T  :  n.   13. 


INUKX  405 

I.onguorth  estate  —  Vol.  1  :  100. 

Longworth,    Nicholas     (founder    of    the     fortune)  —  Vol.    1:97. 

255-258. 

Longworth,    Nicholas  —  Vol.   1:258. 
Lords    of    Trade,   complaints   to,   of   corrupt   seizures  —  Vol.    I: 

?6,  29,  34.  36-39. 
Lorillard,   Pierre  —  Vol.   I  :  196. 
l.orillards.  The  — Vol.   1 :  143,   148,   195,  242. 
Louisiana,  land   frauds   in  —  Vol.   I:  133;   Vol.   1I:2O-2I,  41. 
Low,   A.   Maurice,  cited — Vol.  Ill:  177,  246,  248. 
Lowber,  Robert  W. —  Vol.  111:24-25. 
Lumber   Trust,   The  —  Vol.   II  :  40. 

Macy.  William  H.—  Vol.  11:360. 

McCormick,  Cyrus  II.— Vol.   11:228,  23 [-232,  360;  Vol.  111:26. 

McP-ride,    Tohn,   cited  —  Vol.    11:229. 

Md.eod.    Arthur   A.— Vol.    11:248-249:    Vol.    Ill:  216-217. 

McCilynn,    Father  —  Vol.    II  :  239. 

McKenney.  Thomas  L.,  V.  S.  Superintendent  ot  Indian  Af- 
fairs, denounces  Astor's  debauching  and  swindling  of  In- 
dians—  Vol.  1:113,  1T6-M8.  119:  Vol.  111:343-  347-348. 

McNeill.   cited  — Vol.    1 1  :  50,    187.  348-349. 

Mail  subsidies,  corrupt  procuring  of  —  Vol.  II:  113-120:  Vol. 
Ill:  59-62. 

Maine,   grant   of   to   C.orges  —  Vol.    I  :  31. 

Maginnis.    Martin,   cited  —  Vol.    III:. 178-381. 

Manhattan    Company    or    Bank  —  Vol.    I:  161-162.    165-166,    168. 

175- 

Manhattan    Elevated    Railroad    Company  —  Vol.   HI  :  84-8=;. 
Mansfield,    Josie  —  Vol.    II  :  315. 
Marius,    Peter  —  Vol.    1:47. 
Marlhorough.    Duke    of — Vol.    11:274. 
Martin.-/.   Francis  —  Vol.  11:86. 
Mason,    Charles.    {_".    S.    Commissioner    of    Patents,    cited — -Vol. 

II:  i8t. 

Mason,   Captain   Joint' — Vol.    1:29. 

"Massachusetts,    Constitutional    Convention    of    18-3  —  Vol.    11:  \\. 
Ma!te--on,   Orasmus   ?,.—  Vol.   II  :  299, 
Max\vfll,   i,.   B     (of  Maxwell   land  grant) — Vol.  11:85.  80:   V<«! 

111:324.  334- 
Mears,  John    !!.— Vol.    Ill  :  20-3:. 

::<-    Bark  —  V<  -1.    I  :  r62. 
'       ics'   Bank  — Vol.    I  :  162-165. 
I't-chants'    Bank-—  \"o!     1  :  163.    165.    [85. 
trop  ilita:i    P  >ar  [of    !  lealth.   cited       Vol.    '.  :  218-220. 
1 1 d       '    - '          '     I ' : a  1    i  '  •  :  '      •  •  •.         \ "nl .    11  :  2 : . 


406  IXDKX 

Milton,   Colonel  John,  cited — Vol.    1:  133. 
Milwaukee  and   Horicon    Railroad  —  Vol.    111:43. 
Milwaukee    and    Superior    Railroad    Company  —  Vol.    Ill :  36-37. 
Mineral   lands,    fraudulent    seizure  of  —  Vol.    1:134;    Vol.    11:26- 
27,  32-33,   41-48,  80-83:    Vol.   Ill:  31 1-337,   350-352.   377-383. 
Minnesota,   land   frauds  in  —  Vol.   11:83;   Vol.   111:24-25,  44-56, 
352-356. 

and     Northwestern     Railroad    Company  —  Vol.    Ill: 
357-372. 

•Vol.  Ill:  79-80,  88. 
1 1  :  246. 
111:75. 

1:279;    Vol.    11:243,   278-279;   Vol. 
Ill  :  loo.  234,  249-250,  374. 
Montana,  land    frauds  in  —  Vol.   11:83;  Vol.  111:377-383. 


313;    Vol.    111:64,   66,   81,   91,   93,    146-149,   his   career.    169- 

310. 

Morgan,  junius   S. —  Vol.    Ill:  149-151.  death  of,  214. 
Morris  and   Essex    Railroad  —  Vol.   Ill:  105-107. 
Morris,   Kdwanl  —  Vol.    I  :  290. 
Morris,    Mary  —  Vol.    1:  139. 
Morris,    Robert  —  Vol.    I  :  57. 
Morris,   Roger — Vol.   I:  139. 
Mortier,   Abraham  —  Vol.    1:167-168. 
Morse,   Charles   W.— Vol.    111:292-297. 
Morse,  George   W.—  Vol.   Ill  :  166. 
Morton,    liliss   and    Company — Vol.    11:360-361. 
Morton,    Levi    P.— Vol.    11:361. 
Mutual    Life    Insurance    Company   corruption   and    frauds  —  Vol. 

Ill:  266-276. 

National  Greenback  Labor  Party  — Vol..  II:  91. 

Xavarro,    Jose    K       Vol.    Ill  :  83. 

Xavy    ScandaN     (bad     supplies    and    equipment) — Vol.    II:  114: 

118-119.    126-127,    134-137,  292-294. 
Xeebe,    Oscar  —  Vol.    I  I  :  2  30-2  U- 
Xewbold.   Governor  J.   G.,  cited  — Vol.   Ill:  no. 
Xew   Hngland   Company,  The  —  Vol.   I  :  24. 
\"ew    Hampshire,   claimed    by    Samuel    Allen  —  Vol.    1:29-30. 
Xew   Jersey   Central    Railroad  —  Vol.    Ill:  71. 
Xew    (crsey   Transportation    Company  —  Vol.    Ill:  107. 
Xew    Mexico,    great    land    frauds    in  —  Vol.    IT:  83-89;    Vol.    Ill: 

,;"  !•  335- 
•',-,:•    York    and    1  [arlain    Railroad  —  Vol.    I:2IO;    Vol.    II  :  138 

I    1";     174-     (<>7- 

•.:•,:•    Yurk    Central     Railroad  —  \'ol.     1:209-211,    251:    Vol.     H: 
[48    152,    192,   206.   243,   248.   256,   261-270,   277-278;    Vol.    ITT: 


407 

NTc\v    York    City    municipal    land,    corrupt     obtaining    of  —  Vol. 

I:  143-150.  211-213,  252:  Vol.    II  :  26 1 -263. 
Xew    York    Constitutional    Convention    of    1846,    cited  —  Vol.    I: 

IOO. 

Xew    York   and    Xew    England    Railroad  —  Vol.    11:250-251. 

Xew  York  City  elevated  railroads  franchises  obtained  by  evi- 
dent corruption  —  Vol.  1  i  [  :  ^3-84. 

New  York  Life  Insurance  Company,  corruption  frav  Is — Vol. 
Ill:  2(  .6-276. 

New  York,  Xew  Haven  and  Hartford  Railroad  —  Vol.  H: 
248-250. 

Xeu    York,   Ontario   and    Western    Railroad  —  Vol.    IF:  252. 

Xew  York.  Susnuehanna  and  Western   Railroad  —  Vol.  111:232. 

Nichols,   Harry    P..  cited  —  Vol.   11:263. 

Xicholson.   John  —  Vol.    II :  251. 

Nolan,   Gervacio.   'and  grant  —  Vol.    11:86,  89. 

Norfolk   and    Western    Railroad  —  Vol.    11:256. 

Northern  Pacific  Railroad  —  Vol.  11:43.  46,  343;  Vol.  111:51, 
230-241.  3747^88. 

Northern    Securities    Company  —  Vol.    Ill:  241. 

Ohio,   extensive   land    frauds   in  —  Vol.    11:  in. 

Ohio   Constitutional    Convention   of    1850-51  —  Vol.    !  I  :  30. 

Ohio    Land    Company ----- Vol.    II:  in. 

Old    Dominion  Mining  Company  —  Vol.   11:343. 

Oregon,   great   land    frauds   in  —  Vol.    11  :  82. 

(TRourke,    Matthew    [.—  Vol.    1:213. 

Owen.   Robert    Dale  — Vol.    1:225:   Vol.    II  1:167. 

Pacific    Mail    Steamship   Company    (blackmailed    by    Commodore 

Yanderliih,    and    mail    subsidies    secured    by    bribery") — Vol. 

1!  :  ri7    121  :    Vnl.    HI:  50-62.    187. 
Paint.',   Thomas  —  Vol.    1:42. 
Palmer.    Potter  —  Vol.    I  :  201. 
Pan-Electric    Scandal  —  Vol.    Ill:  11/0-201. 
Parsons,     \lberi    R.—  Vol.    [I:.'3O,   234. 
1'arsons    Frank,    cited --Vol.    1:250.   283-284;    Vol.    11:44,    208- 

200. 
r'arlianient.     Uritish.    enact*    laws    auain-4    American    colonies  — 

Vol.    I  :  55-56. 

Parti ni,    lame-;,   cited-  -vol.    I  :  tou.    108.. 
Patents,  "theft   of-   -  \"ul.    1 :  132,    14=;   Vol.    It:t8o-l8i;  Y 

165  -]()(>. 
!'.    roons,     the— \"o!.     [-.14,     16-22:     powers    of.     Vol. 

•  •    •  i  :    decline   of    their    estates.    Vol.    I  :  07-100. 

,;i.     !"-<  pii    Mcdill.    riled  -      Vol.    I  :  ._>o  •    205. 
I1     UT-OII     T     M..    ;  '     <     Senator  -  -  Vnl    [II  :  ino! 
1     '      !y.    -  k'org.         V..1.    I  :  50. 

'..    (ieoi'L!        ......    Juniu      Mornan) — Vol.    ill:  140- 


408  IXUEX 

Pennsylvania    Coal    Company  —  Vol.    111:231-233. 

Pennsylvania,   land    frauds   in  —  Vol.    11:251-252. 

Pennsylvania    Railroad  —  Vol.    II:  208-210,    243,    256;    Vol.    Ill: 
95-98.   123.  256-257. 

Perkins.    George    W.—  Vol.    111:266-26;.    270.    274. 

Perkins,   Thomas   Handasyd  —  Vol.    1:02. 

Pettigrcu-.   U.   S.   Senator,  cited  —  Vol.   II:  4=1-46 :   Vol.   Ill:  572- 
373-  382-383. 

Phelps,    Dodge   and    Company  — Vol.    11:337-344:    Vol.    Ill:  50, 
1 53- 

Phelps,    George    D. —  Vol.    111:105-109. 

Phelps,  John  J  —  Vol.   Ill:  105. 

Phillips.   Adolphus    (son   of   Frederick) — Vol.    1:38,    139.    141. 

Phillips.    Frederick,    (backer    and    employer    of    the    pirate    Bur- 
gess. I—  Vol.    I  :  38.    141.    142. 

Phillips.   William  A.,  cited  — Vol.   11:34.  93- 

Pierce,    President    Franklin — \"ol.    111:44. 

Pinchot,  Gifford  — Vol.  H  :  47  :  Vol.  111:307. 

Pinkerton    detectives  —  Vol.    11:228-229. 

Piracy  of  literary  work  —  Vol.    1:135-136. 

"  Pittsburu    Survey"    The.    cited — -Vol.    111:282-28=;. 

Platt,    Thomas    C— Vol.    II:  71. 

Plymouth    Colony  —  Vol.    1:24-51. 

Po'e.  Edgar  Allan  —  Vol.  1:225." 

Pomeroy.   I".    S.   senator,  cited  —  Vol.    11:357. 

Poor's    "Railroad    Manual."   cited  —  Vol.    lll:iii.    180. 

Portage   Lake   and    Lake    Superior    Ship   Canal    Company  —  Vol. 
II:  25. 

Postal   Department,  looting  of  by  railroads  —  Vol.   II  :  202-203. 

Powell,  F.  W.,  cited  — Vol.  111:22. 

Pratt.   Zadoc  — Vol.   11:283-284. 

Prison   Association   of  New  York — Vol.    I:  181. 

Prison   and  penitentiary  system  —  Vol.   1:177-181. 

Privateering,    fortunes    from  —  Vol.    1  :  57-5^. 

Property  qualifications   for  voters  —  Vol.   1:69-70,    190-101. 

Pro>titmi<  >n  —  Vol.    I  :  269-272. 

Pulitzer,    fo-eph —  Vol.   Ill  :  90. 

Pullman  Company,  The  — Vol.   1:278-28;.  295;   Vol.   11:277. 

Pullman.    George    AL— Vol.    1:279;    Vol.    II  ^250.    500-361:    Vol 
[11:83-84. 

Purely.   Fliiah.— Vol.    II:  141. 


Railroad    <-orruption  —  \'ol.    1:250-251.   276:    Vol.    11:30-47.    141- 

M2.     T4'--i-i,     T~4-i6r,    173-174,     (76-179,     197,    201-26=;.    267- 

26-1.     "    '    300.   302-323.   3.^-- 367;    V.'.l.    111:24-31.   32-38!  45-46. 

'...     '.:   73,    7".    97    I  no,     105    !(X;      :  '''    122.     128-132,     134    I  -'  . 

1     fiolx  ri  -  -  VoL  '\\  ':(>--.  ' 

.     r:-,:1    :):td  —Vol.    II  :  6;:    Vo'.    Ill  :  220 


INDKX 


Roam.    Xorman    B.  —  Vol.    1  :  279. 

Rensselaer.    txiliaen    Van  —  Vol.    1  :  18. 

Rensselacr,  Stephen  Van   (one  of  the  last  patroons)  —  VoL  1:44, 

9-8. 

Rhinelandcr  estate  —  Vol.   I:  106.   14.?,  224. 
Rhinelander,   Frederick  —  \"ol.    1  .  :  145,  242,   252. 
Rliinelandcr,    \\'illiam  —  Vol.    1:145-146,   242.   252-253. 
Rhinelandcr.  William  C.  —  Vol.   1  :  212,  213,  253. 
Rice,  LT.  S.  Senator,  cited  —  Vol.  11:358. 
Ridyeway,    Jacob  —  Vol.    1  :  196. 
Roberts,  Charles  C—  Vol     11:296. 
Roberts,    Marshall    O.—  Vol.    1:214-215;    Vol.    II:  117-118,    121- 

122,  292-293:   Vol.    Ill  :  160-161,  322. 
Roberts,    Dr.    Peter,   cited  —  Vol.    11:255. 
Rochefoucault    Liancourt,    Duke   de.   cited  —  Vol.    Ill:  158. 
Rockefeller.  John   I).—  Vol.   II  :  96,    199.  210;  Vol.  111:94-95,  -246. 

2^0.    2^4-2^6. 

Rockefeller.   William  —  Vol.   TT:2io:   Vol.    Ill  :  94-95.  246. 
Romaine,    Benjamin  —  Vol.    I  :  143,    144,    243 
Roosevelt,   Jamt-;  —  Vol.    I:  148. 
Roosevelt,   'President    Theodore  —  Vol.    1  :  216.    258:    Vol.    11:46, 

7^.  2^8:  Vol.  111:246-248.  20/>-}oo. 
Root.    Elihu  —  Vol.    I  :_>]  5:   Vol.    111:248. 
Rosser,    I.   Travis  —  Vol.  "ill:  24. 
Russell,    Charles    Edward,   cited  —  Vol.    Ill:  386. 
Russell.   Thomas  —  Vol.    1  :  60. 
Rothschilds,  the  —  Vol.   Ill  :  189. 
Rutgers    Anthony  —  Vol.    1:253. 
Rutgers,    _!"hn  —  Vol.    1:253. 

Rutland   and    Wa^hin.trton    Railroad  —  Vol.    11:285. 
Ryan,    Thoma<    F.—  Vol.    111:277.   306. 


. 

Sajjan.  Prince  de  —  Vol.  111:92. 
Sage,    Russell  —  Vol.    IT:  360,    367,    368:    Vol.    Ill:  11-70.    7.5-86 

oi,    103.    138. 

Sand  ford,  (ieiitral  J.   \\'.   A.,  cited  —  Vol.   1  :  133. 
Sanurede.   Christo,    (land   urant  >  —  Vol.    11:87,  80. 
Schell,    Edward  —  Vol.    \:  214-313. 
Schermerhorn,    Peter  —  Vol.    1:254. 
Schermerhorn.    William    C.  —  \"ol.    I  :  202. 
Schermerhorn?,    the—  Vol.    1:  143,    148.   224,   2V\   242,   2-4 
Schiff.   Jacob    IT.—  Vn!.    ill:  274. 
Sclml  arth,   C.    !  '.--  Vol.    Ill  :  if>6. 
:;  •]  uyler,  (Jeoroe   \\  ..  cited  —  Vol.    [  :  34. 
Sciin\ier,   Pe'.er,   secure.-  estate  by  bribery        \r<>\.    f  :  33,    ^7. 
-   '     '  b,   Charles    M.      V->1.    Ill  ^253  -'54.'  .  o  2-  •: 

b.    O-car-  V..I.    1  1  :  230  234' 
:•        .  Thoma<    K.~  \"ol     'T  180-2^,7  :    \'--'.     ':!;•'.—  ?-. 


41 0  I.NUKX 

Seli^man   Brothers,   J.   and    \\". —  \"ol.    Ill:  189. 

Sharp.   Jacob  — Vol.    II  :  141  :    Vol.    111:83,   222. 

Shearman,   Thomas   G.,  cited  —  Vol.   I  :  107  :   Vol.   11:98 

Sherman,  John  —  Vol.   II  :  301  :    Vol.    III:i88. 

Shippers,    free   use   of   Government    money  —  Vol.    1:79.   81.    129. 

Sioux  City  and  St.   Paul   Railroad  —  Vol.   111:58.   110-113. 

Sioux   City   Railroad    Contracting    Company  —  Vol.    Ill:  115. 

Sistare,    George    K. —  Vol.    1:214. 

Slavery,   black,   introduction    of  —  Vol.    I  :  12.    13;    conditions   of. 

Vol.    1:179-180:    extension    of,    Vol.     II:  3^4;    slave    traffic, 

Vol.    Ill:  158-160. 

Sloan.    Samuel  —  Vol.    Ill:  182,   210. 
Sloo,   Albert    G. —  Vol.   II:  1 17-121. 

Shmis  — Vol.   1:218-220.  240,  268-269:   Vol.   11:56-57. 
Smith,   Alexander    Donald  —  Vol.    111:361-368. 
Smith,    Henry    M.— Vol.    II  :  323. 
Smith,   Matthew   L..  cited  —  Vol.   I  :  168.  203. 
Smith,  Colonel   William  —  Vol.   1:33-  38.  39-40. 
Smith.   Thomas  H.— Vol.    I  :  80. 
Smith,   A.   D.   and  J.   Y.— Vol.   Ill:  160. 
Snelling,  Colonel  J..  cited  —  Vol.    1:115-116. 
Snow,   Ambrose  —  Vol.   II:  135. 
Snyder,   Carl,  cited  —  Vol.    11:252. 

Society   for  the   Prevention  of   Pauperi.-m  —  Vol.   I  :  73,  76. 
Southard.    T.    J. —  Vol.    II:  133,    135.    137. 
Southern  Pacific  Railroad  —  Vol.  11:43.  355:     Vol.   Ill:  134,   144- 

145. 

South    Pennsylvania   Railroad  —  Vol.    II:  208-210. 
Spahr,   Charles    B.,   cited  — Vol.    I  :  290 ;    Vol.    11:245.   -?7'- 
Spark-,    William   A.   J.,   U.   S.    Land   Commissioner,   cited  —  Vol. 

11:26,  33.  37.  42.  49,  80-83.  89;  Vol.    111:326. 

Speycr.  Jam-. Vol.   111:222. 

Spies,  Augu-t  —  Vol.   II  :  252. 

Standard    Oil    Company — Vol.    11:27.    53-    74.    08.    100.    199-201, 

242,    259.    276.    277-278;    Vol.    111:94-95,    125.    M4-I45.    197. 

240,  248.  261,  290,  295.  298. 
Stanford,    Leland  —  Vol.    II  :  71,    360:    hi-    career    de-cribed.    \'>  ' 

HI:  124-143. 

Statiton,   V.    S.    Secretary   of   \\  ar  —  Vol.    II:  132. 
Stead.    William   T.,   cited  —  Vol.    1:271. 
Steel  Trust  — Vol.  Ill  :  25^-265,  279-286. 
Strenwyck,    Conieliu-  —  Vol.    1  :  47. 
Stein,  Augustus,  cited  —  Vol.   II  :  322. 
Sterne,   Simon,  cited  —  Vol.   II:  iu>-i6i. 

m.    Frmoi-    Lynde  —  Vol.    111:222-223. 
ven.    George — Vol.    Ill:   v.i 

!  rl  C-ard     V—  Vol.  ' 
-•    von".    Simon—  Vol.    Ill  : 

..-:!-,    i  'Hah.   cited  —  Vo] 

,\ard.    Ira.   cited  —  Vol.    II  :  219. 
;  r,l.    r,jhn_Vol.    1  :  210:   Vol.    11  :  i-i. 


IXUIiX  411 

Stewart,  A.  T.—  Vol.  I:  195,  318. 

Stokes,   Anson   Phclps  —  Vol.   11:339. 

Stokes,  James  —  Vol.   11:336. 

Stokes,   J.   G.    Phelps  — Vol.   11:346. 

Stokes,   Thomas  —  Vol.   II :  339. 

Stone   and    Timber   Act  —  Vol.    11:30-40,  46. 

Strikes  — Vol.   1:282-284;  Vol.   11:55,  56,  59,  61,  64-65,  203-204, 

227-230,  272-273;   Vol.  111:88-39.   122.  247-248,  254,  384-385. 
Suffrage,   struggle   for  manhood — -Vol.   1:190-191. 
Sugar    Trust  —  Vol.    11:74,    242,    colossal    import    frauds,    34(1- 

347  ;   Vol.   Ill  :  227,  228. 
Supreme    Court    of    the    United    States    decisions  —  Vol.    1 :  188 ; 

Vol.   II  :  1 8,  32-33,   37,   122,    138,   365;   Vol.   I II:  15-18,  39-42, 

75.  93.  241,  315-318.  330,  356,  370'.  377- 

Swartwout,    Samuel,   his   enormous   defalcation  —  \  ol.    1:75- 
Swinton,    John  —  Vol.    11:349. 

Tammany    Hall  —  Vol.    1:144,    211-21(1,    252;    Vol.    11:237-240, 

Tammany  Hall.  "History  of,"  cited  —  Vol.   I:  141,  216;  Vol.  II: 

n»,  159;   Vol.   Ill  :25. 
Taney,  Roger  B.—  Vol.  1 : 188. 
Taylor,   Jacob  —  Vol.    1:149. 
Taylor,   Moses  —  Vol.   1:195,  214. 
Taxation,    evasion   of  —  Vol.    1:184-187,   231-232,   288-289:    Vol. 

ll:22O-22i,  27^:  Vol.  Ill:  61,   no,  209-210. 
Teller,  Henry  M..  cited  — Vol.  11:35;  Vol.  HI:  too. 
Tenement   houses   in    New   York   City  —  Vol.    I  :  218-222,  240. 
Tennes>ee   Coal  and   Iron  Company  —  Vol.   111:262,  298-301. 
Tenth    National    P>ank  —  Vol.    (1:331. 

Texas.    land    frauds   in  —  Vol.    11:90-91.   354-355;    Vol.    Ill:  208. 
Texas   Pacific  Railroad  —  Vol.  111:77-78,   134-136. 
Thorndike,   Israel— Vol.   1:58. 
Tierra    Amarilla    land    grant— Vol.    11:87. 
Tilden.   Samuel  J. —  Vol.   111:43,  48. 
Timber    lands,    fraudulent    securing   of  —  Vol.    1:28-38.    132-134; 

Vol.    II:i7-22.    32-33,   42.   30-49,    78-91.   358-359:    Vol.    HI: 

314-334,  35^-357- 
Tipton,    General,   seizure   of   liquor    from    A>tor's   American   Fur 

Company  —  Vol.    I  :  1 17. 
Tobacco    Trust — 'Vol.    II  :  74. 

Toombs,  I".  S,  Senator,  cited  —  Vol.   11:  113,   110-118. 
Tracy.   Nathaniel  —  Vol.  1:58. 
Trading  class,  -pringing  up  of — Vol.   I 
Trinity    Church    or    Corporation —Vol. 

2; }. 

Troy';'  •    '    S  -henectady    Railroad       Vol. 
I'wt    d     "Ring"      \"ni      1  :  i  ;S.    211-216;     voi,     n:<»;,     i  ?^      r 

s-!7-  -\M-3Tr>. 

Tweed,    \Villiam    M.—  \  ol.    (1  :  144.    158.    173,  314-316. 


4*-2  INDEX 

Union    Pacific    Railroad  —  Vol.    II:  33-34,   41,   43,   351-368;    Vol 

III  :  63-76. _ 79,  80.   109. 
L'nion  Bank  of  Maryland  —  Vol.  I:  188. 

United   States   Mail    Steamship   Company  —  Vol.    II:  117-121. 
United   States   Bank   (see  Bank  of  the   United   States). 
U.-her,  John  —  Vol.  I:  31. 
United    States   Shipbuilding   Company  —  Vol.    Ill:  260-261. 

Van    r.urcn,  Martin  —  Vol.   11:66. 

Vanderbilt,   Alfred   G.—  Vol.   11:275-276;    Vol.   111:274. 

\\nderbilt,    Consuelo  —  Vol.    11:274. 

Vanderbilt,  Cornelius  (founder  of  fortune) — Vol.  1:9",  H&- 
195,  210-211,  251;  Vol.  II:io5-ii2;  his  large  blackmailing 
transactions.  Vol.  II: :  113-122,  123;  his  methods  during  the 
Civil  War,  Vol.  11:132-137:  goes  into  railroads.  Vol.  II: 
141-152;  acquirement  of  railroads  and  corruption  of  legis- 
latures. Vol.  11:153-163.  164-194;  his  death.  Vol.  II  :  194- 
195.  also  Vol.  11:203,  278.  280,  286-287.  292.  304-312,  317- 
319:  Vol.  111:26-27.  103.  121.  124.  1 60,  181. 

Vanderbilt,    Cornelius     (grandson    of    the    founder) — Vol.     II: 

98.  223-224.  243-280. 

Vanderbilt,  Cornelius  Jeremiah    (son  of  the   founder) — Vol.   II: 

i 94- {95- 
Vanderbilt,    Cornelius    (great    grandson   of   the    founder) — Vol. 

1 :  251  ;  Vol.   II :  95-98,  275,  276. 
Vanderbilt.  Frederick  W.— Vol.  11:98. 
Vanderbilt.   Gladys  —  Vol.    11:274-275. 
Vanderbilt.   William   II.    (son   and  chief  heir  of   founder) — Vol. 

IT:i95-222.    247,    278;    Vol.    III:8o-8i,    86,     123,    124,    191, 

193-194.   215-216. 
Vanderbilt,    William    K.     (grandson    of    founder) — Vol.    11:98. 

99,  223-224.  243.  280.  238-243. 
Vanderbilt,  William  K..  Jr. —  Vol.   11:277. 
Vanderbilt,    Reginald — Vol.    11:27;. 

Van   Oss,  cited  — Vol.   II  :  208. 

Van  \Yyck,  C.  H..  U.  S.  Senator,  ciled  —  Vol.   II  :  128,  294,  340. 

Vilas,    U.   S.    Po.-tma-ier-General.  cited  —  Vol.    1 1  :  202. 

Villard.  Henry  — Vol.   111:375-376,  381. 

Visayan   Railroad  —  Vol.   11:277. 

Waha.-h  and  Erie  Canal  Company  —  Vol.  II  :  2;. 

\Vahash  Railroad  — Vol.   111:78-79.  9;.  98. 

Wallace,  J.   W.  cited  — Vol.   II:  128. 

\Vanamaker.   John- — Vol.    II:  202.   250. 

Warren    Railroad  —  Vol.    Ill:  105-108. 

Washington.    George,    landed    estate    '  f — -Vol.    1:43. 

\Va-hiriL'!on.    State    of.    ereat    land    frauds    in — Vol.    I 

Vol'.    [IF  :  374-383. 

Weaver.   Gen.  ml,  cited—  Vol.   II:  91 
Webb.    W.    I -I  -    Vol.    I:  148 


I.XDKX  413 

Western  Union  Telegraph   Company  —  Vol.   F:2Si;  Vol.   Ill  :  80- 

82,  90,  98. 

Westminster,    Duke  of  —  Vol.    1:240. 
\Yest   Shore    Railroad  —  \"ol.    1 1  :  207-208. 
Wetmore,    Prosper  —  Vol.    I  :  181  ;    Vol.    IF:  117-118. 
"Wilson    Committee  " — Vol.    11:358;    Vol.    111:114-115. 
Wilson,   U.    S.    Senator  —  Vol.    I!:35V3T> 
Whitney,  Asa  — Vol.  Ill:  164. 
Whitney,   Eli  —  Vol.    1:62.   132. 
Whitney,   Harry    Payne  —  Vol.    11:276. 
Whitney,  William  C. —  Vol.  II:  176,  210,  276. 
Williams,  Alexander   S. —  Vol.    11:  ^o. 
Williams,  J.  I),  and  M.—  Vol.  HI:  155-158. 
Wisconsin,   land   frauds   in  —  Vol.   1:134;   Vol.    111:32-38. 
Wisconsin,  bribery  in  —  Vol.    Ill:  ^2-38. 
Wilson,  R.  T.—  Vol.  11:2/6. 
Working-men's    Party,    The  —  Vol.    1:171-174;    Vol.    11:68.    236: 

Vol.   Ill:  184. 
Wright.   Carroll    D..  cited  — Vol.    1:282:   Vol.  IT:  182,   204.   218: 

Vol.    111:226. 
Wyoming,  land  frauds  in  —  Vol.  11:83,  367. 


UNIVERSITY  OF  CALIFORNIA  LIBRARY 

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